Annual Report and Accounts For the year ended 31 May 2021 Contents Chairman’s and Chief Executive’s Report Strategic Report Directors’ Report Corporate Governance Statement 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 Group Statement of Changes in Equity Parent Company Statement of Changes in Equity Group and Parent Company Statement of Cash Flows Notes to the Accounts Company Information Notice of Annual General Meeting Notes to Notice of Annual General Meeting 2 5 8 11 17 18 26 27 28 29 30 31 32 55 57 59 FISKE plc Page 1 Chairman’s and Chief Executive’s Report Trading After the Covid-19 lock-down induced fall in market values in March 2020, a hesitant recovery promptly began but only really took hold in October 2020. Overall, portfolio values took until the latter part of our trading year to recover past their late 2019 values which was an impediment to our management fee income. Nevertheless, both commissions on trading and management fees each increased, even after a strong performance last year. We continue to attract new clients and to migrate clients from advisory to discretionary services. Overall, full year revenues rose by 13% to £6.1m (2020: £5.4m). Costs Over the last five years we have invested heavily: in new back-office systems, in the acquisition of Fieldings, in strengthening operational capacity and in compliance. We have also engaged external resources where appropriate to minimise long term increases in staff levels, and such consultancy pushed up the short-term operating expenses. Whilst we have every intention of continuing to invest in growth, we can say that we have got past the surge in such costs. Operating expenses level pegged at £5.7m in the year to 31 May 2021 (2020: £5.7m). Outturn After reporting a pre-tax loss of £27,000 in the first half-year, we have made a profit of £637,000 in the second half which has resulted in a full year pre-tax profit of £610,000 (2020: loss £127,000). The second half of the year benefitted from increased commission revenues and increases in management fees as markets rose. The cash flow arising from this is greater by some £160,000 that is set aside annually for amortisation or impairment of goodwill or customer bases arising from past acquisitions. Ocean UK Equity In May 2021 our unit trust, Ocean UK Equity, passed its third anniversary. With a total return of 24.6%, being 7.6% annualised, the fund is in the top quartile over those three years. The fund has outperformed its benchmark (CBOE UK All Companies) and sector (IA UK All Companies) by a significant margin. As at the end of May 2021 the fund was valued at £9.8m (2020: £7.6m). Euroclear During the year, we took advantage of an unsolicited offer to acquire some of our shares in Euroclear by releasing 28% of our holding. Euroclear has been a very profitable investment for Fiske: we have now realised a profit of £1.2m and we still retain £3.6m worth of Euroclear shares. The realisation of this profit has further strengthened our balance sheet and capital adequacy position, providing an extra £1.4m of cash. Euroclear’s business income margin increased from 28% in 2019 to 33% in the year to December 2020 as a result of positive operating leverage achieved during the year, whilst their operating margin decreased from 43% to 40% in 2020. Net earnings per share increased to €137.2 in 2020 compared to €136.9 in 2019. Taking into account recent transaction prices in Euroclear shares, we have marked the carrying value of our investment to €1,600 per share being £3.6m in total. This represents a significant store of value on our balance sheet and an asset that continues to pay dividends. Net assets Shareholder’s funds amount to some £8.1m and within this we now hold some £3.5m of cash. Share capital In November 2020, the company made a deferred consideration payment due to the vendors of Fieldings Investment Management, of £198,000. Part of this was settled by the allotment of 61,069 Ordinary Shares. This was the third and final such payment and thus there will be no further such share issues to the vendors of Fieldings. The Company’s share capital now comprises 11,754,859 ordinary shares. Dividend The Board has resolved not to pay a dividend for the year to 31 May 2021 (2020: £nil). Page 2 FISKE plc Chairman’s and Chief Executive’s Report continued Impact of Covid-19 Last year the transition to remote working was swiftly executed and working with lockdown and other restrictions has become normal. Indeed, if anything, we enjoyed the benefit of increased productivity in certain areas of the business as a result of working-from-home. For those members of staff with young families, working-from-home has been a challenge and the lifting of restrictions and a move to mixed office and home-based working will be welcomed. Staff We would like to thank all members of staff for their unswerving commitment and perseverance during the last year as the pandemic ran its course. As a Company we have worked very effectively in both an entirely remote manner as well as adapting quickly to a hybrid model when we were able to access our offices again. Strategy We continue to implement our ongoing strategy to welcome new investment managers with established client relationships to increase our assets under management and advice. We believe that with our traditional values, modern systems and up to date regulatory framework we provide an attractive place to work for aspiring, independently minded private client investment managers. As part of our strategy, we are redeveloping our website this year to show case our services more clearly whilst also continuing our focus on migrating clients to our fee-paying services. Markets Global equity markets advanced strongly during the year led higher by the U.S with the technology heavy NASDAQ up 45%. Improving macroeconomic conditions, continued rollout of the vaccine program, a strong corporate earnings recovery, synchronised global growth expectations, continued monetary and fiscal support and pent-up demand/build up in excess savings by consumers are all factors which helped to drive markets higher. Sterling was also strong against the US Dollar moving from a depressed post Brexit level of US$1.23 to US$1.42. Many investors and strategists are now asking how far equity markets can run on given their impressive gains from the post pandemic lows recorded in March 2020. Caution might be warranted given that there are plenty of uncertainties to ponder; policymakers could scale back fiscal and monetary support, taxes will have to rise at some stage to help pay for the extraordinary level of government spending during the pandemic and investors remain fixated on whether the recent uptick in inflation is transitory or not. On the latter, if inflation becomes more entrenched, Central Banks may have to raise interest rates sooner and faster than they are currently forecasting. Despite these uncertainties, markets remain incredibly sanguine with the volatility index, the ‘Vix’, continuing to trend down. UK equity markets were encouraged by signs of a rebound in the UK economy with the FTSE 100 closing above 7,000 in April for the first time in 14 months and the FTSE 250 hitting all-time highs. Macroeconomic data being released was exceeding expectations and this led the Organisation for Economic Co-Operation and Development (OECD) to raise its GDP growth forecast for the UK to 7.2% in 2021, up from its March projection of 5.1%. Some of this optimism was overshadowed by rising inflation and an increase in covid cases linked to the variant first detected in India. This led the government to delay the reopening of the economy on 21 June. UK markets have been stuck in a sideways trading range in May and June and we have seen some rotation back into more ‘growth’ orientated and ‘quality’ stocks away from ‘early cycle’ and ‘recovery’ or ‘value’ ones. The UK market is trading at a discount to its international peers and UK plc continues to attract interest from private equity firms. Morrisons, the food retailer, is the latest acquisition target with a £6.3 billion bid from a Fortress led consortium. The UK market still offers value relative to bonds, from a yield perspective, with the FTSE 100 offering a prospective dividend yield of c. 3.9% versus c. 0.7% on offer from UK 10-year gilts. We have recently witnessed a flattening in the UK gilt yield curve as yields at the long end of the curve have gently retreated. Internationally, the first half of calendar 2021 has seen growth rates accelerating as corporate sales and profits recover and economies open up from lockdown and are combined with Central Bank stimulus in nearly all markets. FISKE plc Page 3 Chairman’s and Chief Executive’s Report continued But by the latter part of the year Central Banks will slow their money creation and begin to tighten. Announcements to this effect have already been given by the European Central Bank and by the Bank of Canada. It seems likely the US Federal Reserve will soon follow suit. Only Japan continues with its programme of buying equities using exchange traded funds. If inflation rises faster than expected or fails to fall back from expected levels, a rise in interest rates should follow. Similarly, in emerging markets the tightening is already more advanced with China and eastern Europe raising rates, and with South American nations and Turkey now recording very high inflation rates. In summary, as world economies rebound from the very worst effects of Covid, a combination of supply chain disruption, shortages of materials and labour together with a strong recovery in demand is causing prices to rise. The spectre of inflation is naturally of concern to investors. It is too early to tell if this will prove to be transitory, as most Central Banks are guiding us, or more long-lasting. Whilst US, UK and European indices are gradually pushing to new post Covid highs the main laggard is China which has witnessed sharp falls following the crack down by the regulatory authorities. China’s speculative market remains a serious concern with scope to further unsettle global markets. Outlook We have had a good start to our new financial year. Whilst the first few months have seen trading volumes soften a little, in line with more traditional summer levels, portfolio values are rising with markets which will enhance our fee revenues. We look forward to another positive year although with a degree of caution due to the likely impact of tightening monetary policy and the probable volatility that may ensue in global markets. AGM Shareholders’ views are important, and the Board encourages shareholders to submit their votes via the CREST system. Shareholders may also submit questions in advance of the AGM to the Company Secretary via email to info@fiskeplc.com or by post to the Company Secretary at the address set out on page 55 of this report. In light of the recent lifting of most restrictions relating to Covid-19, the forthcoming AGM, which is to be held on Friday 22 October 2021 at 12.30pm, will be run as a physical meeting at our offices in Salisbury House. Clive Fiske Harrison Chairman 13 September 2021 James P Q Harrison Chief Executive Officer Page 4 FISKE plc Strategic Report The Directors set out below their Strategic Report on the Company for the year ended 31 May 2021. Activities and business strategy The principal activity of Fiske plc and its subsidiary undertakings is the provision of financial intermediation which consists of private client and institutional stockbroking, and private client investment management. Fiske plc is the primary trading entity of the Group, is authorised and regulated by the Financial Conduct Authority and is a member of The London Stock Exchange listed on the Alternative Investment Market (‘AIM’). The firm’s core strategy is to focus on delivering a high-quality service to clients. This entails giving both private and institutional clients a personalised service delivered by experienced individuals. The firm’s business model is to earn portfolio management fees and commissions on transactions, both of which are charged on an advalorem basis. Preservation of client capital in real terms and seeking growth on portfolio values provides a long-term sustainability for both the firm and for clients. The Board intends to maintain a strong balance sheet and to provide clear, unbiased advice to clients. The firm is capitalised with equity capital, with no debt and does not use financial instruments except its intra-day Crest cap. Business review The Covid-19 induced lock-down was the most significant influence on the business in the year, impacting markets, revenues and operations. Despite this, revenues have increased and overall costs declined. Financial review and key performance indicators The Group’s activities resulted in a profit for the year of £610,000 compared to a loss of £127,000 in the prior year. Although this is a welcome improvement, it is not regarded as satisfactory. A key performance indicator, closely monitored by the board, is the total value of safe custody assets which were £739m at 31 May 2021 (2020: £622m, 2019: £660m). We aim to maintain safe custody assets at least in line with market movements and for the year to 31 May 2021 this was achieved. No dividends were paid to shareholders in the year. The results of the Group for the year are set out on page 31 and the Consolidated Statement of Financial Position on page 27. Future developments Your board is seeking continued expansion of the business through attracting further investment managers to join the firm and is alert to small acquisitions. There is substantial value in the group’s holding in Euroclear resulting in a strong net asset position from which to leverage growth. Section 172 statement Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making. The Directors continue to have regard to the interests of, and the impact of the firm’s activities on, the various stakeholders in the firm and to consider what is most likely to promote the success of the Company for its members in the long term and look to ensure that sufficient consideration is given to issues relating to the matters set out in s172(1)(a)-(f). Whilst the importance of giving due consideration to our stakeholders is not new, S172 requires that the Board elaborates how it discharges its duties in the arena. We have categorised our key stakeholders into four groups. Where appropriate, each group is considered to include both current and potential stakeholders: • Clients • Regulators • Employees • Shareholders Our dealings with stakeholders and others are shaped by the culture and attitudes of all staff. FISKE plc Page 5 Strategic Report continued Clients We strive to have regular dialogue with all our clients and to ensure that portfolios are appropriate to their needs. This goes hand in hand with our offering a bespoke service. In parallel, treating customers fairly is a core value to us as a firm. Regulators We have an open and transparent dialogue with the regulatory and industry bodies that we work with. Building public trust in the industry through raising standards in the investment industry and creating a trusted environment for customers is fundamental to our business. We have an ongoing, regular, reporting relationship with the FCA including a focus on safeguarding customer assets. Employees The quality of our staff is a key component of the efficient delivery of good service to our clients. We strive to help staff up-skill so as to improve our performance and to provide a stimulating environment in which to work. Shareholders Our shareholders are of course the owners of the firm and we need to act fairly as between members of the company. The great majority of our shareholders have been so for a long period. We have a regular dialogue with our key shareholders – but all are welcome to be in communication. Our annual general meetings are popular, and all shareholders are encouraged to attend. (It is acknowledged that this will be difficult for 2021.) Not all significant events or decisions will affect one or more categories of stakeholders. Significant events/decisions in the year Key s172 matter(s) affected Actions and impact Covid-19 lock-down Clients, Employees Sale of 28% of the firm’s holding in Euroclear Shareholders, clients • • • • Prior investment in IT leveraged to ease switch to work-from-home Improved productivity Significant profit realised Increase in the firm’s regulatory capital Risk management The Group is exposed to a number of business risks. The risk appetite of the Group is determined by the Board, members of whom are also the principal shareholders. 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. 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 and stock is held until settlement is effected. The Group does not have significant credit risk exposure to any group of third parties having similar characteristics. There are no expected credit losses on any financial assets. • Market risk The Group is mainly exposed to market risk in respect of its trading as agent in equities and debt instruments and in its exposure to counterparties in the market. Market exposure arising from unsettled trades is closely monitored and managed during each trading day. Page 6 FISKE plc Strategic Report continued Market risk also gives rise to variations in asset values and thus management fees, and variations in the value of investments held by Fiske plc, acting as principal. • 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. • Regulatory risk The Group pays close attention to the risk of breaching, or non-compliance with, applicable regulations and restrictions, which could result in regulatory censure, fines and reputational damage. The compliance function is afforded high priority within the firm, as well as close attention to cultural adoption of regulatory objectives by staff. • Operational risk There is a whole range of operational risks to which the Group is exposed, 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 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-office systems and which is regularly reviewed. The Covid-19 lockdown in March 2020 resulted in the business continuity plan being put into action. Since then, operations have continued effectively with staff able to carry out their normal duties remotely. Pillar 3 disclosures are published on the Company’s website at www.fiskeplc.com. This Strategic Report was approved by the Board of Directors and authorised for issue on 13 September 2021. Signed on behalf of the Board of Directors Clive Fiske Harrison Chairman FISKE plc Page 7 Directors’ Report The Directors have authorised for issue this report together with the audited financial statements for the year ended 31 May 2021. As stated in the Strategic Report on page 5, the firm does not use financial instruments except its intra-day Crest cap. The Corporate Governance Statement on page 10 forms part 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: J P Q Harrison† C F Harrison* T R Pattison** A R Fiske-Harrison † F G Luchini (retired 31 August 2020) M H W Perrin Ordinary 25p shares at the date of this report Ordinary 25p shares at 31 May 2021 2,312,010 2,312,010 2,083,328 2,083,328 349,617 227,000 49,000 35,000 349,617 227,000 64,000 35,000 Ordinary 25p shares at 31 May 2020 2,312,010 2,103,328 345,791 232,000 84,000 35,000 † Including 2,133,802 (2020: 2,133,802) shares held by LongSand Limited, a company controlled by J P Q Harrison and 7,000 (2020: 7,000) shares held by Mrs A Harrison wife of Mr J P Q Harrison at the date of this report. * Including 218,000 (2020: 218,000) shares held by Mrs B Harrison, wife of Mr C F Harrison at the date of this report. ** Including 8,674 (2020: 8,674) shares held by Mrs C Pattison, wife of Mr T R Pattison at the date of this report. Directors’ interests – Share options Details of Directors’ options over ordinary shares are as follows: Number of options At start of year Granted during year Exercised during year Expired or lapsed during year At end of year Exercise price Market price on date of exercise Date from which exercisable F G Luchini – Unapproved 75,000 J P Q Harrison – Approved 250,000 – – – – 75,000 28.75p – 1 May 2005 – (125,000) 125,000 70.00p – 1 June 2018 The exercise price at the start of the year was the same as at the year-end stated above and will not change throughout the remaining contractual life of the option. The closing mid-market price of the Company’s ordinary 25p shares at 31 May 2021 was 70p (2020: 62.5p). Page 8 FISKE plc Directors’ Report continued Major shareholdings The Company has been notified in the following notifiable interests in its voting rights: J P Q Harrison C F Harrison Craven Hill Investments Limited P G Turner Capital Financial Markets Limited Miton Group S J Cockburn* Mrs C M Short B A F Harrison At the date of this report At 31 May 2021 Ordinary shares 2,312,010 2,083,328 1,154,860 734,500 618,258 610,000 487,236 386,029 376,500 % 19.67 17.72 9.82 6.25 5.26 5.19 4.14 3.28 3.20 Ordinary shares 2,312,010 2,083,328 1,154,860 734,500 585,311 610,000 487,236 386,029 376,500 % 19.67 17.72 9.82 6.25 4.98 5.19 4.14 3.28 3.20 * Including 15,000 (2020: 15,000) shares held by Mrs J A Cockburn, wife of Mr S J Cockburn at the date of this report. Director’s Remuneration The director’s remuneration report is contained within note 5 to the financial statements below. 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 21. 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. Going Concern After 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. This analysis is based on the performance and progress of the Company, future cash flow projections, and an assessment of current and future risks including the effects of Covid-19, the appropriateness of the business strategy and review of the financial position of the Company. 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. Future Developments and Risk Information on exposure to price risk, credit risk, liquidity risk and cashflow risk together with likely future developments in the business are discussed in the strategic report. 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. FISKE plc Page 9 Directors’ Report continued 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) so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and (ii) 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. By Order of the Board J P Q Harrison Chief Executive Officer 13 September 2021 Salisbury House London Wall London EC2M 5QS Page 10 FISKE plc Corporate Governance Statement Biographies of directors are set out at the back of this Report and Accounts immediately prior to the Notice of Annual General Meeting. In proposing retiring directors for re-election at the Annual General Meeting, the Board has considered the skills, experience and contribution of each, as part of an ongoing process. Your Board is committed to the principles supporting good corporate governance from executive level and throughout the operations of the business. Fiske plc is listed on AIM and rule changes in March 2018 required all companies listed on AIM to comply with a recognised corporate governance code. The Board adopted the Quoted Companies Alliance Corporate Governance Code (QCA) for Small and Mid-Size Companies. The Board believes that the QCA Code is both proportionate and appropriate in view of our size, strategy and resources. The QCA Code consists of 10 broad and accessible principles together with a set of minimum disclosures that are considered to be appropriate for both companies that are at an early stage of development and organisations that are more established. Our Corporate Governance Statement, which aims to assist shareholders in understanding our approach to corporate governance, can be found on our website. The Board The Board is collectively responsible for the management of the company and its success by directing and supervising its activities. It is also responsible for setting the company’s culture and promoting our core values of dealing with all stakeholders with integrity, acting professionally and treating all fairly and with respect. Board Composition During the year, the Board comprised three executive and two non-executive directors. In addition, one long standing executive director, Gerard Luchini, retired on 31 August 2020. The two non-executive directors are considered independent directors. All directors submit themselves for re-election at least every three years. MHW Perrin, a non- executive director who has served on the Board for over nine years, submits himself for re-election each year. The Remuneration and Nomination Committee (a standing committee of the Board) is responsible for reviewing the composition of the Board and, when appropriate, follows a transparent process when identifying potential candidates for appointment to the Board. Such candidates will need to be duly knowledgeable with the appropriate skills; can work together with existing members and have a voice at Board meetings by taking decisions objectively in the interests of the company. The people chosen will have the necessary experience and practical ability required to develop and deliver the strategy and business model of the company. Board Effectiveness I believe that the Board has an effective and balanced structure. The existing members have the appropriate skill and a wealth of experience in the financial services sector which enables them to challenge, motivate and enhance our business to the benefit of all stakeholders, shareholders, clients, employees and suppliers alike. Members of the Board, Investment Managers and all employees of the Group are required to undertake continuous professional development to maintain their skillset. The three executive directors are full time employees. As regards the two non-executive directors I am satisfied that they continue to devote sufficient time to their roles with the company. Shareholder engagement As Chairman I am aware that understanding our shareholders’ and other stakeholders’ interests is crucial in building trust and explaining what has transpired during the past year. I have had dialogue with some of the significant shareholders during the past year to discuss company matters and their comments about Fiske plc. The dialogue with other shareholders would take place at the Annual General Meeting where we encourage questions from our shareholders. We publish the results of shareholder votes at General Meetings on our website. Finally, Corporate Governance is dynamic and as the Board develops the strategy of the Company or the business model is changed the governance by the Company will evolve to meet the changing circumstances. FISKE plc Page 11 Corporate Governance Statement continued Attendance at meetings In the year to 31 May 2021, attendance at meetings can be quantified as: Scheduled Board meetings Remuneration and Nomination committee Audit Risk committee committee 16 15/16 16/16 14/16 1/16 16/16 14/16 2 2/2 – – – 2/2 1/2 2 – 2/2 – – 2/2 2/2 4 – 3/4 – –/4 4/4 – Number of meetings in the year Clive Fiske Harrison James Harrison Tony Pattison Gerard Luchini† Martin Perrin Alexander Fiske-Harrison † Retired 31 August 2020 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 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 Head of Compliance covering FCA 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 for the day-to-day running of the business. Customers The Directors set it as a priority that customers and their affairs are well looked after, and customers and their treatment is specifically reviewed at each Board meeting. The Board believes that building good relationships with clients over a sustained period of time creates a better investment environment and basis for the Company’s future. Clive Fiske Harrison Chairman 13 September 2021 Page 12 FISKE plc Corporate Governance Statement continued Remuneration and Nomination Committee Report Composition and constitution The Remuneration and Nomination Committee is appointed by the Board and consists of not less than two members. The members of the remuneration and nomination committee are: C F Harrison (Chairman), A R Fiske-Harrison and M H W Perrin The Committee formally meets at least twice a year. The purpose of the committee is to (i) ensure that the Group’s executive directors, Associates and senior executives are fairly rewarded for their individual contributions to the Group’s overall performance, and (ii) demonstrate to all the stakeholders in the business that the remuneration of the executive directors and senior executives of the Group is set by a Remuneration Committee of board members, who are independent and have no personal interest in the outcome of their decisions and who will give due regard to the interests of the Group. The Committee is authorised by the Board to (i) pursue or investigate any activity within its terms of reference, and (ii) to obtain outside legal or other independent professional advice (advisers with relevant experience and expertise may attend meetings of the Committee if the chairman of the Committee considers this necessary). Areas of Focus The work of the committee is (i) to determine the remuneration of executive directors and to approve any changes to their other terms and conditions including pensions and contractual notice arrangements, (ii) to supervise the establishment of, and changes in, employee and executive share option schemes and other employee benefit schemes, (iii) to approve all share option allocations and to be consulted in regard to proposals for the grant of share options to staff, (iv) to monitor and review the membership and composition of the Board and senior executives; to consider appointments to and promotions within the Board, plans for succession and to make recommendations to the Board-on-Board appointments, promotion and succession generally. Signed on behalf of the Remuneration and Nomination Committee Clive Fiske Harrison Chairman, Remuneration and Nomination Committee FISKE plc Page 13 Corporate Governance Statement continued Risk Committee Report Composition and constitution The Risk Committee is appointed by the Board and consists of not less than two members. The members of the risk committee are: M H W Perrin (Chairman), and J P Q Harrison, CEO In addition, meetings are generally attended by two or three senior executives as required. The Committee formally meets at least twice a year. In practice, most of its work is executed by its members on a continuous basis in conjunction with senior operational management. The purpose of the committee is to (i) review the full spectrum of risks and the impacts on business planning and capital requirements, (ii) promote risk management within the company, helping to integrate risk management within the company infrastructure and day-to-day business processes, and (iii) provide appropriate risk information to the Board. The Committee is authorised by the Board to (i) pursue or investigate any activity within its terms of reference, (ii) to seek any information that it requires from any employee and all employees shall be directed to co-operate with any request made by the Committee, (iii) to obtain outside legal or other independent professional advice, and (iv) to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. Areas of Focus The work of the committee is (i) to identify and evaluate the key risk areas to the business, (i) to identify those individuals who are accountable for managing specific risks, (ii) to assess the incidence and impact of various risks, (iii) to design and implement controls by which those risks can be managed and maintained at a level acceptable to the Board and (iv) to monitor and review results. During the year there has been particular focus on new internal policies and procedures, and on preparations for new ICARA processes and documentation by way of an upgrade to our ICAAP documentation. This work is being carried out in conjunction with the Audit committee and with assistance from external consultants. The committee interacts with the work of the audit committee to maximise comprehensive coverage of internal controls and interacts with management activities to address client assets and CASS recovery, the application of company policies and regulatory reporting. Signed on behalf of the Risk Committee Martin H W Perrin Chairman, Risk Committee Page 14 FISKE plc Corporate Governance Statement continued Audit Committee Report Composition and constitution The Audit Committee is appointed by the Board and consists of not less than two members, two of whom are to be non-executive directors. The Chief Executive, the Senior Financial Officer, the Head of Compliance and a partner of the external auditors will attend meetings of the Committee as required. The members of the audit committee are: M H W Perrin (Chairman), C F Harrison, and A R Fiske-Harrison The Committee formally meets at least twice a year. In practice, much of its work is executed by its members on an as needed basis. The purpose of the committee is to (i) ensure that management has systems and procedures in place to ensure the integrity of the financial information reported to the shareholders and in the maintenance of a sound system of internal control; and (ii) to provide, by way of regular meetings, a line of communication between the Board and the external auditors. The Committee is authorised by the Board to (i) investigate any activity within its terms of reference, (ii) to seek any information it requires from any employee and all employees shall be directed to co-operate with any request made by the Committee, (iii) to obtain outside legal or other independent professional advice, and (iv) to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. Areas of Focus The work of the committee is (i) to consider the appointment of the external auditor, the audit fee and any questions of resignation or dismissal, (ii) to review the non-audit services supplied to the Company by the external auditor, (iii) to consider with the external auditor the nature and scope of the audit, (iv) to consider internal audit functions and priorities, (v) to review the interim and full year financial statements and related announcements/press releases before submission to the Board focusing particularly on: a) application of the Company’s accounting policies, b) any changes in accounting policies and practices, c) the going concern assumption, d) compliance with the Stock Exchange, legal and other regulatory requirements, and e) the statement on internal control. (vi) to discuss any problems and observations and recommendations arising from the interim review and final audit and the Report of the Auditors to the Audit Committee, including their Significant Risks dashboard, any weaknesses identified or recommendations made in respect of the Company’s accounting systems or internal controls and any matters the auditor may wish to discuss (in the absence of management where necessary), FISKE plc Page 15 Corporate Governance Statement continued (vii) to review the external auditor’s report on their audit of full year financial statements and on their review of interim statements and management’s response, (viii) to consider any other topics, as may arise. There were no interactions between the Company and the Financial Reporting Council during the period. In reviewing the preparation of the Report and Accounts, the critical accounting judgements and key uncertainties were evaluated and further information is set out in note 2 to the accounts. During the year there has been particular focus on preparations for new ICARA processes and documentation by way of an upgrade to our ICAAP documentation. This work is being carried out in conjunction with the Risk committee and with assistance from external consultants. Also, in conjunction with the work of the Risk Committee, the risk and control framework and processes have been reviewed with rolling updates to policies and procedures. The Company augments internal resources with the use of external resources to carry out internal audit activities on a project by project basis. This does not normally affect the work of external auditors. It is the Company’s policy to balance guidelines on auditor rotation with the cost benefits of continuity. There are no contractual restrictions on auditor choice. BDO were first appointed to carry out the audit of the report and accounts of the Group for the year to May 2020. BDO also provide tax advisory services: the Board do not consider that this gives rise to any material conflict of intertest. The Audit Committee assess the effectiveness of the audit on the basis of timely completion of the audit, on audit costs being on budget and on the efficiency and industry knowledge of the audit staff. Whistleblowing The Chairman of the Audit Committee is the Whistleblowing Champion for the Firm. It is formal policy that any member of staff may contact the Whistleblowing Champion privately. Signed on behalf of the Audit Committee Martin H W Perrin Chairman, Audit Committee Further information Shareholders may review more detail on Fiske’s Corporate Governance on our website at www.fiskeplc.com. Page 16 FISKE plc 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) in conformity with the Companies Act 2006 and have also chosen to prepare the parent company financial statements under IFRSs in conformity with the Companies Act 2006. 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 Group and the Company and of the profit or loss of the Group 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 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. Responsibility statement We confirm that to the best of our knowledge: • • • the financial statements, prepared in accordance with International Financial Reporting Standards in conformity with Companies Act 2006 give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; the strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company’s position and performance, business model and strategy. This responsibility statement was approved by the Board of Directors on 13 September 2021 and is signed on its behalf by: J P Q Harrison Chief Executive Officer FISKE plc Page 17 Independent Auditor’s Report to the Members of Fiske plc Opinion on the financial statements In our opinion • • • • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 May 2021 and of the Group’s profit for the year then ended; the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006; the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Fiske plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 May 2021 which comprise the consolidated statement of total comprehensive income, the consolidated and company statements of financial position, the Group and company statements of changes in equity, the Group and company statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. In assessing going concern we have considered cash flow forecasts, budgets, commitments applicable and planned strategic decisions by the Directors. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included: • • • Assessment of the latest board approved cash flow forecasts for the Group, which covered a period of more than 12 months from the date of approval of these financial statements; We corroborated input data and reviewed the current period and after date results against forecasts; and We challenged management’s assumptions taking account of the relevant contractual arrangements in place Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Page 18 FISKE plc Independent Auditor’s Report to the Members of Fiske plc continued Key audit matter Coverage How we addressed the matter in our audit • 100% (2020: 100%) of Group profit before tax • 100% (2020: 100%) of Group revenue • 100% (2020: 100%) of Group total assets Key audit matters 2021 2020 KAM 1: Valuation of Euroclear shares KAM 2: Accuracy of revenue recognition KAM 3: Impairment of goodwill and intangibles KAM 4: Accuracy of prior year restatement adjustments • • • • • • • Materiality Group financial statements as a whole £91,400 (2020: £53,800) based on 1.5% (2019: 1.5%) of revenue. An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of the valuation of investments, goodwill and intangibles which involves a high level of estimation uncertainty, as well as the Directors’ assessment of going concern. There are 2 (2020: 2) significant components in the Group, which are all registered and operate in the UK, each of which is subject to a full scope audit by BDO LLP. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. FISKE plc Page 19 Independent Auditor’s Report to the Members of Fiske plc continued Key audit matter How we addressed the matter in our audit Valuation of Euroclear shares The Group holds unlisted shares in Euroclear Plc measured at fair value with movements through Other Comprehensive Income. The balance for the investment in Euroclear shares as at 31 May 2021 was £3,604,000 (2020: £4,962,000). The valuation of unlisted equities is a key audit matter given the inherent uncertainty involved when estimating the fair value of unlisted equities and there is a risk that the valuation is materially misstated. Refer to notes 1l and 16 for the accounting policy and investment note. We responded to the risk by performing the following procedures: • We reviewed the accounting policies in relation to the valuation of the Euroclear shares and assessed their compliance with IFRS 9 and 13; • We reviewed the Euroclear financial statements as at 30 June 2021 for any indication of impairment of the investment. • We verified the basis of management’s valuation of the shares based on a recent transaction involving buy/sell of Euroclear and recalculated the value of the investment based on this; • We obtained confirmation of the Groups’ shareholding directly with Euroclear; and • We tested derecognition of disposed shares by agreeing cash received to bank statement and recalculation of profits and movement between revaluation reserve and retained earnings. • Agreed the price of recent transactions to supporting documentation. • We reviewed the financial statement disclosures to assess the compliance with the disclosure requirements of the accounting standards. Key observations: • As a result of our work we considered management’s basis for and assessment of the valuation of the Euroclear shareholding to be reasonable. Page 20 FISKE plc Independent Auditor’s Report to the Members of Fiske plc continued Key audit matter How we addressed the matter in our audit Accuracy of revenue recognition The Group’s revenue is made up of distinct revenue streams, primarily commission revenue and management fees. Refer to notes 1d, 2b and 3 for the accounting policy and critical accounting judgements. The standard commission and fee rates can vary at times at the discretion of brokers. They are also subject to manual calculation by management and given the complexity of the workings, we consider this as a key audit matter. Management fee and commission income amounted to £6,018,000 (2020: £5,347,000). We responded to the risk by performing the following procedures: • We considered whether the revenue accounting policy (refer to note 1d) is in accordance with IFRS 15; • We tested a sample of management fees and commissions by checking contractual terms of the agreements for each service undertaken, and considering the point at which performance obligations were satisfied to gain assurance over accuracy and cut-off; • Specifically, for commission fees: • We performed recalculations, on a sample basis, of the commissions receivable based on the agreed commission structure to assess whether the commission recognised is accurate and we obtained explanation from management for differences arising due to variances applied at the discretion of the brokers; • On a sample basis we tested the pricing of shares used by management to third party support; and • We checked the sequential numbering of the revenue stream listing. • Specifically, for management fees • We recalculated, on a sample basis, management fees based on agreed structure with clients and agreed the fee structure to client contracts; and • On a sample basis, we traced to bank statement management fees that have settled during the year; and • We checked expected number of annual charges • We reviewed the disclosures related to revenue recognised in the notes to the financial statements in accordance with the relevant accounting framework. Key observations: • As a result of performing the above procedures, we have not identified any material misstatements in relation to accuracy of revenue recognition FISKE plc Page 21 Independent Auditor’s Report to the Members of Fiske plc continued Key audit matter How we addressed the matter in our audit Impairment of goodwill and intangibles The impairment review of goodwill and other intangible assets is considered to be a significant audit risk and a key audit matter due to the judgements made in determining whether there is an indication of impairment in respect of the intangible assets and also in the calculations of recoverable amounts. The carrying value of goodwill and customer relationships is £341,000 (2020: £371,000) and £787,000 (2020: £918,000) respectively. Further details are included within the critical accounting estimates and judgements note in note 2 to the financial statements. We responded to the key audit matter by performing the following procedures: • We assessed reasonableness of management’s impairment methodology, whilst challenging the judgements and assumptions made by carrying out a critical assessment of the principles and integrity of the discounted cash flow model, including the assumptions used by management and considering the sensitivity of the valuation model to the key assumptions through a sensitivity analysis to assess the impact of each assumption on the value in use. • We reviewed and obtained supporting evidence of the inputs to the value-in-use model prepared by management in order to calculate the recoverable amount of the Investment Management Agreement Intangibles for Fieldings and the Goodwill recognised in respect of the Vor and Ionian transactions. • We challenged the key assumptions applied by management by corroborating input data to supporting documentation and historical information in regard to revenue forecasts, ongoing expenses and the discount factor applied. • Together with our internal valuations experts, we determined whether the discount factor represented an appropriate weighted average cost of capital for the Group and that there was no material valuation differences between ranges of WACC calculated. • Re-performed management’s cash flow discount calculation for impairment consideration Key observations: • As a result of performing the above procedures, we consider the judgements and assumptions made in respect of the valuation of intangibles to be reasonable. Page 22 FISKE plc Independent Auditor’s Report to the Members of Fiske plc continued Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Group financial statements Parent company financial statements 2021 £ 2020 £ 2021 £m 2020 £m Materiality 91,400 53,800 75,600 44,800 Basis for determining materiality 1.5% Revenue 1.0% Revenue 1.5% Revenue 1.0% Revenue Rationale for the benchmark applied Revenue is a performance measure closely monitored by management and the users of the financial statements and hence makes a reasonable benchmark for the materiality. Performance materiality Basis for determining performance materiality Component materiality 64,900 34,900 52,900 29,100 70% (2020: 65%) of overall materiality having considered a number of factors including the expected total value of known and likely misstatements based on previous assurance engagements and other factors such as management’s attitude to adjustments. We set materiality for each component of the Group based on a percentage of between 0.1% and 2% of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality was £15,800 (2020: £17,500). In the audit of each component, we further applied performance materiality levels of 65% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £4,500 (2020: £1,000) as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. FISKE plc Page 23 Independent Auditor’s Report to the Members of Fiske plc continued Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: • • the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which 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. Responsibilities of directors 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, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group and the Parent Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Page 24 FISKE plc Independent Auditor’s Report to the Members of Fiske plc continued • We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which the Group operates, and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. Our audit procedures were designed at Group and significant component levels to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. • We focused on laws and regulations that could give rise to a material misstatement in the financial statements, including, but not limited to compliance with Companies Act 2006, relevant accounting standards and UK tax legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. • We considered compliance with this framework through discussions with management and those charged with governance and performed audit procedures on these areas as considered necessary. Our procedures involved enquiries with Management, review of the reporting to the directors with respect to compliance with laws and regulation, review of board meeting minutes and review of legal correspondence. • We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to management bias in accounting estimates, valuation of investment, goodwill and intangibles. We addressed the risk of management override of internal controls through testing journals, in particular any entries posted with unusual account combinations or posted by senior management. We evaluated whether there was evidence of bias by the Directors in accounting estimates that represented a risk of material misstatement due to fraud. We challenged assumptions and judgements made by management in their significant accounting estimates by corroborating input data to supporting documentation and/or assessing against historical information. • We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non- compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Kelly Sheppard (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London 13 September 2021 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). FISKE plc Page 25 Consolidated Statement of Total Comprehensive Income For the year ended 31 May 2021 REVENUES Operating expenses OPERATING PROFIT/(LOSS) Investment revenue Finance income Finance costs PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION Taxation PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION OTHER COMPREHENSIVE INCOME Items that may subsequently be reclassified to profit or loss Movement in unrealised appreciation of investments Deferred tax on movement in unrealised appreciation of investments NET OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO EQUITY SHAREHOLDERS PROFIT/(LOSS) PER ORDINARY SHARE BASIC DILUTED All results are from continuing operations. Notes 3 6 7 8 9 10 10 2021 £’000 6,098 (5,716) 382 237 – (9) 610 (43) 567 75 (12) 63 630 4.8p 4.8p 2020 £’000 5,383 (5,743) (360) 143 148 (58) (127) – (127) (793) 187 (606) (733) (1.1p) (1.1p) Page 26 FISKE plc Consolidated Statement of Financial Position 31 May 2021 NON-CURRENT ASSETS Intangible assets Other intangible assets Right-of-use assets Property, plant and equipment Investments held at Fair Value Through Other Comprehensive Income TOTAL NON-CURRENT ASSETS CURRENT ASSETS Trade and other receivables Cash and cash equivalents TOTAL CURRENT ASSETS CURRENT LIABILITIES Trade and other payables Short-term lease liabilities 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/(losses) SHAREHOLDERS’ EQUITY Notes As at 31 May As at 31 May 2021 £’000 2020 £’000 11 12 13 14 16 17 18 19 9 20 21 1,129 1,289 32 – 24 3,604 4,789 2,514 3,498 6,012 65 101 53 4,962 6,470 2,398 2,239 4,637 2,049 2,924 – 43 2,092 3,920 573 573 124 – 3,048 1,589 611 611 8,136 7,448 2,939 2,082 2,553 2,923 2,057 3,597 562 (1,129) 8,136 7,448 These financial statements were approved by the Board of Directors and authorised for issue on 13 September 2021. Signed on behalf of the Board of Directors J P Q Harrison Chief Executive Officer FISKE plc Page 27 Parent Company Statement of Financial Position 31 May 2021 As at 31 May As at 31 May Notes 2021 £’000 NON-CURRENT ASSETS Other intangible assets Right-of-use assets Property, plant and equipment Investment in subsidiary undertakings Investments held at Fair Value Through Other Comprehensive Income TOTAL NON-CURRENT ASSETS CURRENT ASSETS Trade and other receivables Cash and cash equivalents TOTAL CURRENT ASSETS CURRENT LIABILITIES Trade and other payables Short-term lease liabilities 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/(losses) SHAREHOLDERS’ EQUITY 12 13 14 15 16 17 18 19 9 20 21 2020 £’000 65 101 53 1,493 4,962 6,674 2,288 1,898 4,186 32 – 24 1,332 3,604 4,992 2,866 2,789 5,655 1,928 2,679 – 43 1,971 3,684 573 573 124 – 2,803 1,383 611 611 8,103 7,446 2,939 2,082 2,553 529 8,103 2,923 2,057 3,597 (1,131) 7,446 As permitted by Section 408 of the Companies Act 2006, no separate income statement is presented in respect of the parent Company. The profit for the financial year dealt with in the financial statements of the parent Company was £348,000 (2020: profit of £64,000). These financial statements were approved by the Board of Directors and authorised for issue on 13 September 2021. Signed on behalf of the Board of Directors J P Q Harrison Chief Executive Officer Page 28 FISKE plc Group Statement of Changes in Equity For the year ended 31 May 2021 Balance at 31 May 2019 Adoption of IFRS 16 Balance at 1 June 2019 Loss for the financial year Movement in unrealised appreciation of investments Deferred tax on movement in unrealised appreciation of investments TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR Share based payment transactions Issue of ordinary share capital TOTAL TRANSACTIONS WITH OWNERS, RECOGNISED DIRECTLY IN EQUITY Balance at 1 June 2020 Profit for the financial year Movement in unrealised appreciation of investments Deferred tax on movement in unrealised appreciation of investments Realised disposal of Fair Value through other comprehensive income investments TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR Share based payment transactions Issue of ordinary share capital TOTAL TRANSACTIONS WITH OWNERS, RECOGNISED DIRECTLY IN EQUITY Share Share Revaluation Retained capital premium £’000 £’000 reserve £’000 losses £’000 Total £’000 2,904 2,029 4,203 (956) 8,180 – – – (48) (48) 2,904 2,029 4,203 (1,004) 8,132 – – – – – 19 19 – – – – – 28 28 – (127) (793) 187 – – (127) (793) 187 (606) (127) (733) – – – 2 – 2 2 47 49 2,923 2,057 3,597 (1,129) 7,448 – – – – – – 16 16 – – – – – – 25 25 - 75 (12) 567 – – 567 75 (12) (1,107) 1,122 15 (1,044) 1,689 645 – – – 2 – 2 2 41 43 BALANCE AT 31 MAY 2021 2,939 2,082 2,553 562 8,136 FISKE plc Page 29 Parent Company Statement of Changes in Equity For the year ended 31 May 2021 Balance at 31 May 2019 Adoption of IFRS 16 Balance at 1 June 2019 Profit for the financial year Movement in unrealised appreciation of investments Deferred tax on movement in unrealised appreciation of investments TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR Share based payment transactions Issue of ordinary share capital TOTAL TRANSACTIONS WITH OWNERS, RECOGNISED DIRECTLY IN EQUITY Balance at 1 June 2020 Profit for the financial year Movement in unrealised appreciation of investments Deferred tax on movement in unrealised appreciation of investments Realised disposal of Fair Value through other comprehensive income investments TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR Share based payment transactions Issue of ordinary share capital TOTAL TRANSACTIONS WITH OWNERS, RECOGNISED DIRECTLY IN EQUITY Share Share Revaluation Retained capital premium £’000 £’000 reserve £’000 losses £’000 Total £’000 2,904 2,029 4,203 (1,149) 7,987 – – – (48) (48) 2,904 2,029 4,203 (1,197) 7,939 – – – – – 19 19 – – – – – 28 28 – 64 (793) 187 – – 64 (793) 187 (606) 64 (542) – – – 2 – 2 2 47 49 2,923 2,057 3,597 (1,131) 7,446 – – – – – – 16 16 – – – – – – 25 25 – 75 (12) 536 – – 536 75 (12) (1,107) 1,122 15 (1,044) 1,658 614 – – – 2 – 2 2 41 43 BALANCE AT 31 MAY 2021 2,939 2,082 2,553 529 8,103 Page 30 FISKE plc Group and Parent Company Statement of Cash Flows For the year ended 31 May 2021 2020 Group £’000 2020 Company £’000 (restated) (restated) (360) (170) 156 32 173 39 2 (11) 75 24 32 173 39 2 323 24 447 – 143 148 5 (62) 234 (24) 47 143 148 5 (62) 234 (24) 47 OPERATING PROFIT/(LOSS) Amortisation of intangible assets arising on consolidation Amortisation of other intangible assets Depreciation of right-of-use assets Depreciation of property, plant and equipment Expenses settled by the issue of shares (Increase)/decrease in receivables Increase/(decrease) in payables 2021 Group £’000 2021 Company £’000 Notes 382 160 33 101 33 2 348 161 33 101 33 2 (119) (583) (873) (744) Cash generated from/(used) in operations (281) (649) 106 Tax (paid) – – – NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES (281) (649) 106 447 INVESTING ACTIVITIES Investment income received Interest received 237 237 – – Proceeds on disposal of investments held at FVTOCI 1,400 1,400 Purchases of property, plant and equipment (4) (4) NET CASH GENERATED FROM INVESTING ACTIVITIES 1,633 1,633 FINANCING ACTIVITIES Interest paid Proceeds from issue of ordinary share capital Repayment of lease liabilities 21 19 (9) 40 (9) 40 (124) (124) (197) (197) NET CASH USED IN FINANCING ACTIVITIES (93) (93) (174) (174) Net increase/(decrease) in cash and cash equivalents 1,259 891 166 507 Cash and cash equivalents at beginning of year 2,239 1,898 2,073 1,391 CASH AND CASH EQUIVALENTS AT END OF YEAR 3,498 2,789 2,239 1,898 FISKE plc Page 31 Notes to the Accounts For the year ended 31 May 2021 1 Accounting policies General information Fiske plc is a public limited company limited by shares incorporated in the United Kingdom 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 activity of Fiske plc and its subsidiary undertakings is the provision of financial intermediation which consists of private client and institutional stockbroking, and private client investment management. These financial statements are presented in Pounds Sterling, which is the currency of the primary economic environment in which the Group operates and are rounded to the nearest thousand. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Consolidated and Company financial statements. New and revised IFRSs in issue but not yet effective A number of amendments to existing standards have also been effective from 1 June 2020 but they do not have a material effect on the Group financial statements. There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following amendments are effective for future periods: IFRS/Std Description Issued Effective IAS 1 Presentation of Financial Statements IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IFRS 3 Business Combinations Amendments regarding the disclosure of accounting policies Amendments regarding the definition of accounting estimates Amendments updating a reference to the Conceptual Framework February 2021 Annual periods beginning on or after 1 January 2023 February 2021 Annual periods beginning on or after 1 January 2023 May 2020 Annual periods beginning on or after 1 January 2022 The Group do not expect these amendments to have a significant impact on the financial statements. There were no new standards adopted in the current year. (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 2021 as adopted by the International Financial Reporting Interpretations Committee and in conformity 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 IFRS 9 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 Strategic Report on pages 5 to 7. 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, including a review of the impact of the Covid-19 pandemic, 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 and have sufficient regulatory capital 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. Page 32 FISKE plc Notes to the Accounts continued 1 Accounting policies (continued) (c) Basis of consolidation The Group financial statements incorporate the financial statements of the Company and subsidiary entities controlled by the Company made up to 31 May each year. Control is achieved where the Company is exposed, or has rights, to variable returns from its involvement with an investee company and has the ability to affect those returns through its power over the other entity; power generally arises from holding a majority of voting rights. (d) Revenue recognition The Group follows the principles of IFRS 15 Revenue from Contracts with Customers, the outcome of which, for the Group, is no different to the previous accounting standard, 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 and payable on a settlement date basis. Trades are usually executed on a T2 basis but can range from T0 to T15. • Fees: Investment management fees and custody fees are recognised when earned and are billed and payable at periodic intervals according to the relevant contract. Such fees will vary according to the value of funds held and any accrued income reflects known changes in value up to the date of the financial statements. Given that such fees can be accurately accrued for, taking into account market movements, it is felt that the variable consideration is not a constraint in revenue recognition. For each customer identified contract, the Group has analysed the various specific services which are provided. Where contracts with customers address delivery of more than one of these distinct services, each individual service has a single performance obligation for which revenue is recognised independently of other services when the service is delivered. The transaction price for each service is separately set out in the contract. • Dividend income: Dividend income is recognised when the right to receive payment is established. • Government grants: Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. The Group benefitted from a Covid-related grant in the course of the year, the ‘Coronavirus Job Retention Scheme’. No deferred amounts remained at the year-end (prior year: £nil). (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 33 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 and amortisation. 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) Software and software licences The direct cost of acquisition of software licences is capitalised (if in relation to a significant installation) and, upon being brought into use, amortised on a straight-line basis over 6 years. The cost of minor licenses, and the cost of deployment and associated costs to implement significant installations are expensed as incurred. (i) 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. (j) 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 34 FISKE plc Notes to the Accounts continued 1 Accounting policies (continued) Value attributed to customer base of Fieldings is amortised over 10 years, being the assessed economic life thereof. In line with Group policy, a whole year is charged on initial acquisition. (k) Financial instruments The initial date of application of IFRS 9 was 1 June 2018. Pursuant to that: • debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequently at amortised cost; • debt instruments that are held within a business model whose objective is both to collect the contractual cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequently at fair value through other comprehensive income (FVTOCI); • all other debt investments and equity investments are measured subsequently at fair value through profit or loss (FVTPL). The Group has made the following irrevocable election at initial recognition of a financial asset: • • the Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is neither held for trading nor contingent consideration recognised by an acquirer in a business combination in other comprehensive income; and the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch. When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. When an equity investment designated as measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is subsequently transferred to retained earnings. (l) Investments Investments in subsidiary undertakings are recorded at cost and subsequently reviewed for impairment. The Company’s other investments have been designated as Fair Value through Other Comprehensive Income and 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 fair value. At subsequent reporting dates, investments are measured at fair value. Gains or losses arising from changes in fair value are recognised as other comprehensive income. The fair values of investments quoted in active markets are determined by reference to the current quoted bid price. Where independent market prices are not available, fair values are determined using valuation techniques with reference to recent market transactions. (m) 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 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. (n) 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 those with original maturities of three months or less. FISKE plc Page 35 Notes to the Accounts continued 1 Accounting policies (continued) (o) Client money The Company holds money on behalf of clients in accordance with the Client Money Rules of the Financial Conduct Authority. Such monies and the corresponding liability to clients are not shown on the face of the consolidated statement of financial position. The amount so held on behalf of clients at the year-end is stated in note 24. (p) 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. (q) Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. The par value thereof is attributed to Share Capital and the remainder to Share Premium account. (r) Dividends Equity dividends from quoted stocks are recognised at the ex-dividend date, and from unquoted stocks are recognised when paid. (s) 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. The Group has adopted a Black Scholes model to calculate the fair value of options. 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 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. (t) 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 and the timing thereof reasonably assessed. 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. Page 36 FISKE plc Notes to the Accounts continued 1 Accounting policies (continued) 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. (u) 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. 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. (v) Leases Leases which give rise to a right-of-use asset pursuant to IFRS16 are initially measured to give rise to a right-of-use asset and a lease liability. The right-of-use asset is amortised on a straight-line basis over the term of the lease. The lease liability is retired over time by the contrasting interest expense and lease payments. The Group has elected to make use of the following exemptions provided by IFRS 16: • Leases with a determined lease term of 12 months or less from the commencement of the lease will be treated as short-term and therefore not included in the right-of-use asset or lease liability. Instead, lease costs will be recognised on a straight-line basis across the life of the lease. • Leases for which the underlying asset is of low value when new will be exempt from the requirements to value a right- of-use asset and lease liability. Instead, lease costs will be recognised on a straight-line basis across the life of the lease. To apply this exemption, a threshold of £5,000 has been utilised to define “low value”. The Company avails itself of an exemption concession in relation to temporary Covid-19 rent concessions, taking any benefit directly to the income statement. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the implicit interest rate. Lease payments included in the measurement of the lease liability comprise fixed payments, including in-substance fixed payments. FISKE plc Page 37 Notes to the Accounts continued 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. a) Key source of estimation uncertainty – Fair value of investments The Group currently holds an investment in Euroclear Plc, which is held as a fair value asset through other comprehensive income 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 recent share transactions as published by Euroclear Plc. b) Critical judgement – Revenue recognition Investment management fees are earned on the basis of the value of the funds under management. The Group accrues management fees based on past transactions and taking into account movements in indices. The directors’ judgement, based on past experience, is that using this method is unlikely to result in a material misstatement of revenues in the light of market volatility or other factors of uncertainty. c) Key source of estimation uncertainty – Impairment The Group tests goodwill and other intangible assets annually for impairment or more frequently if there are indicators that they might be impaired. This requires an estimation of the value in use of the goodwill and other intangible assets. Estimating the value in use requires management to make an estimate of the expected future cash flows from the entities from which the goodwill arose and for the intangible assets and to choose a suitable discount rate in order to calculate the present value of cash flows. In addition, the value is tested against market value metrics in terms of funds under management. The carrying value of intangible assets are set out in notes 11 and 12. The Directors have concluded that appropriate provisions have been made for impairment charges. 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 management to allocate resources to the segments and to assess their performance. Following the acquisition of Fieldings Investment Management Limited in August 2017, their staff and operations have been integrated into the management team of Fiske plc. Pursuant to this, the Group continues to identify a single reportable segment, being UK-based financial intermediation. Within this single reportable segment, total revenue comprises: Commission receivable Investment management fees Other income/(loss) 2021 £’000 2,854 3,164 6,018 80 6,098 2020 £’000 2,732 2,615 5,347 36 5,383 Substantially all revenue in the current and prior year is generated in the UK and derives solely from the provision of financial intermediation. Page 38 FISKE plc Notes to the Accounts continued 4 Staff remuneration and costs Remuneration policies are recommended to the Board by the Remuneration Committee. The Committee consists of C F Harrison (Chairman), A R Fiske-Harrison 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 FCA’s Remuneration Code applies to certain of the firm’s staff. All 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 as calculated in accordance with the Companies Act, including Directors, employed by the Company within each category of persons, and their aggregate remuneration was: Investment management and dealing Settlement Administration Employees’, including Directors’, costs comprise: Wages, salaries and other staff costs Pension Social security costs 2021 No. 17 5 13 35 2021 £’000 1,186 245 677 2,108 2021 £’000 2,966 72 301 3,339 2020 No. 17 5 14 36 2020 £’000 1,291 261 721 2,273 2020 £’000 2,273 66 239 2,578 FISKE plc Page 39 Notes to the Accounts continued 5 Directors’ remuneration Directors’ emoluments comprise: Emoluments Highest paid Director’s remuneration: Emoluments 2021 £’000 598 230 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 2021 C F Harrison J P Q Harrison F G Luchini†† T R Pattison M H W Perrin A R Fiske-Harrison † Health care provisions †† Retired 31 August 2020 31 May 2020 C F Harrison J P Q Harrison F G Luchini T R Pattison M H W Perrin* A R Fiske-Harrison Gross Salary £’000 115 180 29 26 – – 350 Gross Salary £’000 115 158 115 26 – – 414 Fees Commission £’000 £’000 Pension £’000 Benefits† £’000 – – – – 44 21 65 – – – 204 – – – 8 – – 1 1 8 3 – – – – 204 10 11 Fees Commission £’000 £’000 Pension £’000 Benefits £’000 – – – – 24 24 48 – – – 120 – – – 8 – – 1 1 120 10 7 3 18 – – – 28 * Additional information is given in note 26, Related party transactions. 2020 £’000 620 169 Total £’000 123 191 29 230 45 22 640 Total £’000 122 169 133 146 25 25 620 Page 40 FISKE plc Notes to the Accounts continued 6 Operating (loss)/profit The operating (loss)/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 Non–audit fees: – Other services pursuant to legislation: Interim review – Audit of client money and custody assets – Tax services Impairment of goodwill Amortisation of intangible assets arising on consolidation Amortisation of other intangible assets Depreciation of right-of-use assets Depreciation of property, plant and equipment Lease payments – Land and buildings 7 Finance income Interest receivable: Banks 2021 £’000 98 8 7 30 131 33 101 33 220 2021 £’000 – – 2020 £’000 100 35 7 24 132 32 173 39 220 2020 £’000 148 148 Bank interest received in the year to 31 May 2021 amounted to £16,000 (2020: £148,000). The reduction in interest received was a result of lower bank interest rates. This element of income is now represented within the total revenue in Note 3 above. 8 Finance costs Interest payable on bank loans, overdrafts and other Interest expense on lease liabilities Deemed interest arising on unwinding deferred consideration payable 2021 £’000 4 5 – 9 2020 £’000 (restated) 1 23 34 58 FISKE plc Page 41 Notes to the Accounts continued 9 Tax Analysis of tax 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 2021 £’000 43 – 43 – – 43 2020 £’000 – – – – – – The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, is 19.00% (2020: 19.00%). This is also expected to be the rate applicable in the next financial year. Changes to the UK corporation tax rate were substantively enacted on 24 May 2021. From 1 April 2023 the main corporation tax rate will increase to 25% from 19%. If this enacted rate had been applied this would have resulted in a further deferred tax liability of £181,000. The charge/(credit) for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows: Profit/(loss) before tax Charge/(credit) on profit on ordinary activities at standard rate Effect of: Expenses not deductible in determining taxable profit Non-taxable income Carry back tax relief Tax losses not recognised 2021 £’000 608 116 3 (45) (31) – 43 2020 £’000 (127) (24) 6 (27) – 45 – Page 42 FISKE plc Notes to the Accounts continued 10 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 2021 Profit on ordinary activities after taxation Adjustment to reflect impact of dilutive share options Profit Weighted average number of shares (000’s) Earnings per share (pence) 31 May 2020 (Loss) on ordinary activities after taxation Adjustment to reflect impact of dilutive share options (Loss) Weighted average number of shares (000’s) (Loss) per share (pence) Number of shares (000’s): Weighted average number of shares Dilutive effect of share option scheme 11 Intangible assets arising on consolidation Cost At 1 June 2019 Additions At 31 May 2020 Additions At 31 May 2021 Accumulated amortisation or impairment At 1 June 2019 Charge in year At 31 May 2020 Charge in year At 31 May 2021 Net book value At 31 May 2021 At 1 June 2020 Customer relationships £’000 1,312 – 1,312 – 1,312 (262) (132) (394) (130) (524) 788 918 Basic £’000 565 – 565 11,724 4.8 (127) – (127) 11,673 (1.1) Diluted Basic £’000 565 – 565 11,769 4.8 (127) – (127) 11,714 (1.1) 31 May 2021 31 May 2020 11,724 44 11,769 Goodwill £’000 1,311 – 1,311 – 1,311 (916) (24) (940) (30) (970) 341 371 11,673 41 11,714 Total £’000 2,623 – 2,623 – 2,623 (1,178) (156) (1,334) (160) (1,494) 1,129 1,289 FISKE plc Page 43 Notes to the Accounts continued 11 Intangible assets arising on consolidation (continued) Goodwill arising through business combinations is allocated to individual cash-generating units (‘CGUs’) being acquired subsidiaries, reflecting the lowest level at which the Group monitors and test goodwill for impairment purposes. The CGUs to which goodwill is attributed are as follows: CGU Ionian Group Limited Vor Financial Strategy Limited Goodwill allocated to CGUs 2021 £’000 176 165 341 2020 £’000 206 165 371 The impairment charge arises from a prudent assessment that customer relationships and goodwill change over time and are not of indefinite life. Based on analyses of the relevant customer base segments, a determination was made as to the expected income streams arising over the next 7 years. The recoverable amounts of the goodwill in Ionian Group Limited and in Vor Financial Strategy Limited are determined based on value-in-use calculations. These calculations use projections of marginal profit contributions over the expected remaining stream of attributable value. The key assumptions used for value-in-use calculations are as follows: Direct and indirect costs as % of revenues Growth rate Discount rate 60% 0% 12.5% Had the discount rate used gone up/down by 1%, impairment would have been £6,000 higher/lower and the carrying amount commensurately adjusted. Management determined margin contribution and growth rates based on past performance of those units, together with current market conditions and its expectations of development of those CGUs. The discount rate used is pre-tax, and reflects specific risks relating to the relevant CGU. 12 Other intangible assets Group and Company Cost At 1 June 2019 Additions At 1 June 2020 Additions At 31 May 2021 Accumulated amortisation At 1 June 2019 Charge for the year At 1 June 2020 Charge for the year At 31 May 2021 Net book value At 31 May 2021 At 31 May 2020 Page 44 FISKE plc Systems licence £’000 192 – 192 – 192 (95) (32) (127) (33) (160) 32 65 Notes to the Accounts continued 13 Right–of–use assets Group and Company Cost At 1 June 2019 Additions At 1 June 2020 Additions At 31 May 2021 Accumulated amortisation At 1 June 2019 Charge for the year At 1 June 2020 Charge for the year At 31 May 2021 Net book value At 31 May 2021 At 31 May 2020 Property £’000 274 – 274 – 274 – (173) (173) (101) (274) – 101 A ten-year lease of office premises at London Wall came to an end at December 2020. Since then the company has continued to rent those office premises continuing the quarterly rental payments. The Group used the following practical expedients when applying IFRS16 to leases previously classified as operating leases under IAS17. • Applied a single discount rate to a portfolio of leases with similar characteristics • Excluded initial direct costs from measuring the right-of-use asset at the date of initial application • Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease. Between March and June 2020, the company benefited from certain rent concessions occurring as a direct consequence of the Covid-19 pandemic amounting to £46,606 (prior year: £nil), the benefit of which has been recognised in the profit and loss account for the year as a reduction in costs. FISKE plc Page 45 Notes to the Accounts continued 14 Property, plant and equipment Group and Company Cost At 1 June 2019 Additions Disposals At 1 June 2020 Additions At 31 May 2021 Accumulated depreciation At 1 June 2019 Charge for the year At 1 June 2020 Charge for the year At 31 May 2021 Net book value At 31 May 2021 At 31 May 2020 Office furniture Computer Office and equipment equipment refurbishment £’000 £’000 £’000 162 2 – 164 – 164 (149) (7) (156) (7) (163) 1 8 214 60 – 274 4 278 (197) (32) (229) (26) (255) 23 45 175 – – 175 - 175 (175) – (175) – (175) – – 15 Investment in subsidiary undertakings Company Cost at 1 June Impairment Cost at 31 May 2020 £’000 1,517 (185) 1,332 Total £’000 551 62 – 613 4 617 (521) (39) (560) (33) (593) 24 53 2021 £’000 1,517 (24) 1,493 The value of the subsidiaries is primarily founded in the customer base thereof. The impairment charge arises from an assessment that customer relationships change over time. An impairment provision has been made so as to be consistent with the analysis arrived at in note 11 above. The following are the subsidiaries of the Company at 31 May 2021 and at the date of these financial statements. Proportion of Nominal value and voting rights Incorporated in the UK and registered office at held by parent Year of Salisbury House London Wall EC2M 5QS: Class of shares company acquisition Fieldings Investment Management Limited VOR Financial Strategy Ionian Group Limited Fiske Nominees Limited Ordinary Ordinary Ordinary Ordinary 100% 100% 100% 100% 2017 2009 2002 1988 Nature of business Investment Investment Investment Nominee Page 46 FISKE plc Notes to the Accounts continued 16 Investments held at Fair Value Through Other Comprehensive Income Group and Company Opening valuation Opening fair value gains on investments held Cost Cost of disposals Cost Gains on investments Closing fair value of investments held being: Listed Unlisted FVTOCI investments carried at fair value Gains/(losses) on investments Group and Company Realised gains on sales Increase in fair value Gains on investments 2021 £’000 4,962 (4,303) 659 (182) 477 3,127 3,604 – 3,604 3,604 2021 £’000 1,250 1,877 3,127 2020 £’000 5,759 (5,095) 664 (5) 659 4,303 4,962 – 4,962 4,962 2020 £’000 – 4,303 4,303 The investments included above are represented by holdings of equity securities. These shares are not held for trading. 17 Trade and other receivables Group and Company Counterparty receivables Trade receivables Amount owed by group undertakings Other debtors Prepayments and accrued income 2021 Group £’000 2021 Company £’000 1,065 1,065 – – 1,065 1,065 – 86 1,363 2,514 703 48 1,050 2,866 2020 Group £’000 (restated) 150 1,345 1,495 – 56 847 2,398 2020 Company £’000 (restated) 150 1,345 1,495 85 142 566 2,288 Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value. FISKE plc Page 47 Notes to the Accounts continued 17 Trade and other receivables (continued) Trade receivables Included in the Group’s trade receivables are debtors with a carrying amount of £nil (2020: £nil) which are past due at the reporting date for which the Group has not provided. Counterparty receivables Included in the Group’s counterparty receivables balance are debtors with a carrying amount of £1,065,000 (2020: £150,000) which are past due but not considered impaired. Ageing of counterparty receivables: 0 – 15 days 16 – 30 days 31 – 60 days 18 Trade and other payables Counterparty payables Trade payables Financial liabilities measured at amortised cost being deferred consideration payable Other sundry creditors and accruals 2021 £’000 1,025 22 19 1,065 2021 Group £’000 623 436 2021 Company £’000 623 435 1,059 1,058 – 990 – 870 2,049 1,928 2020 Group £’000 (restated) 1,456 – 1,456 218 1,250 2,924 2020 £’000 128 – 22 150 2020 Company £’000 (restated) 1,456 – 1,456 218 1,005 2,679 Page 48 FISKE plc Notes to the Accounts continued 19 Lease liabilities Current Non-current Maturity analysis: Not later than one year Not later than one year The cash flow impact is summarised as: Lease liabilities at end of prior year Adoption of IFRS 16 at 1 June 2019 Lease liabilities at beginning of year Cash flow† Lease liabilities at end of year 2021 Group £’000 2021 Company £’000 – – – – – – 2021 Group £’000 124 – 124 (124) – – – – – – – 2021 Company £’000 124 – 124 (124) – 2020 Group £’000 124 – 124 124 – 124 2020 Group £’000 – 321 321 (197) 124 2020 Company £’000 124 – 124 124 – 124 2020 Company £’000 – 321 321 (197) 124 † The lease liability is retired over time by the contrasting interest expense and lease payments. 20 Deferred taxation Group and Company At 1 June 2020 Charge for the year Deferred tax released on sale of investments Charge to Statement of Comprehensive Income – in respect of current year At 31 May 2021 Capital Tax Deferred tax allowances Investments £’000 (1) – – – (1) £’000 706 12 (144) – 574 losses† £’000 (94) 94 – – – liability £’000 611 106 (144) – 573 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 19%, being the anticipated rate of taxation applicable to the Group and Company in the following year. FISKE plc Page 49 Notes to the Accounts continued 21 Called up share capital Authorised: Ordinary shares of 25p Allotted and fully paid: Ordinary shares of 25p Opening balance Shares issued Closing balance 2021 2020 No. of shares £’000 No. of shares £’000 12,000,000 3,000 12,000,000 3,000 11,693,790 2,923 11, 617,597 61,069 16 76,193 11,754,859 2,939 11,693,790 2,904 19 2,923 Included within the allotted and fully paid share capital were 9,490 ordinary shares of 25p each (2020: 9,490 ordinary shares of 25p each) held for the benefit of employees. At 31 May 2021 there were 200,000 outstanding options to subscribe for ordinary shares at a weighted average exercise price of 55p (2020: 55p) and a weighted average remaining contractual life of 3 years, 5 months. (2020: 3 years, 9 months). Ordinary shares are entitled to all distributions of capital and income. 22 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. The contingent liability arising thereon is not probable or reliably measurable and therefore it is not believed that any material liability will arise under these indemnities. 23 Financial commitments Lease – classified as an IFRS 16 lease At 31 May 2021 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 2021 Land and buildings £’000 – – – Other £’000 5 – 5 2020 Land and buildings £’000 191 – 191 Other £’000 – – – In June 2010, the Company entered into a lease over its premises at London Wall for a period of 10 years, with a five-year break clause. That lease expired on 31 December 2020. 24 Clients’ money At 31 May 2021 amounts held by the Company on behalf of clients in accordance with the Client Money Rules of the Financial Conduct Authority amounted to £63,153,533 (2020: £56,624,640). The Company has no beneficial interest in these amounts and accordingly they are not included in the consolidated statement of financial position. Page 50 FISKE plc Notes to the Accounts continued 25 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 company, 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 Conduct Authority (FCA) 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 statement of financial position 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. Financial assets – Equities investments (FVOCI) Financial assets – Trade and other receivables (Amortised) Financial assets – Cash and cash equivalents (Amortised) Financial liabilities – Trade and other payables (Amortised) Financial liabilities – Lease liability (Amortised) 2021 Group £’000 3,604 2021 Company £’000 3,604 2020 Group £’000 4,962 2020 Company £’000 4,962 1,151 1,816 1,551 1,722 3,498 2,789 2,239 1,898 2,049 1,927 – – 2,924 124 2,679 124 Prepayments and accrued income are not classified as financial instruments and have been excluded from ‘Trade and other receivables’ in the ‘Categories of financial instruments’ table. A reconciliation from ‘Trade and other receivables – Financial instruments’ to ‘Trade and other receivables’ as shown in the Statement of Financial Position is as follows: Trade and other receivables – Financial instruments Prepayments and accrued income Trade and other receivables – Statement of Financial Position 2021 Group £’000 1,151 1,363 2021 Company £’000 1,816 1,050 2020 Group £’000 1,551 847 2020 Company £’000 1,722 566 2,514 2,866 2,398 2,288 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). The fair value has been established based on recent transactions. FISKE plc Page 51 Notes to the Accounts continued 25 Financial instruments (continued) The Group’s holdings of unquoted equities were valued on the basis of recent off-market transactions. A 1% change in value would give rise to a £36,000 (2020: £50,000) change in value. Financial assets at FVTOCI Quoted equities Unquoted equities Total Financial assets at FVTOCI Quoted equities Unquoted equities Total Level 1 £’000 – – – Level 1 £’000 – – – 2021 Level 2 £’000 – – – 2020 Level 2 £’000 – – – Level 3 £’000 – 3,604 3,604 Level 3 £’000 – 4,962 4,962 There were no transfers between levels during the year. Reconciliation of Level 3 fair value measurements of financial assets Fair Value through Other Comprehensive Income Balance at 1 June Disposals Gain on disposal Appreciation/(diminution) in value in the year Balance at 31 May 2021 Unquoted equities £’000 4,962 (183) (1,250) 75 3,604 Total £’000 4,962 (183) (1,250) 75 3,604 2020 Unquoted equities £’000 5,754 – – (792) 4,962 Total £’000 – 3,604 3,604 Total £’000 – 4,962 4,962 Total £’000 5,754 – – (792) 4,962 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, and stock is held until settlement is effected. The Group does not have any significant credit risk exposure to 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. There are no expected credit losses on any financial assets. Page 52 FISKE plc Notes to the Accounts continued 25 Financial instruments (continued) 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 plc, acting as principal. These are designated as investments held at FVTOCI and are mostly held for strategic rather than trading purposes and not actively traded. 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 nil and 15 days. An analysis of the maturity profile of receivables is listed within the counterparty receivables note above. Sensitivity analysis Equity The fair values of all FVTOCI assets and their exposure to equity price risks at the reporting date are based on the accounting policy in notes 1(k) and 1(l). If equity prices had been 5% higher/lower the revaluation reserve would increase/decrease by £180,000 (2020: increase/decrease by £248,000). Cash The Group’s financial cash asset of £3,498,000 (2020: £2,239,000) is held at a fixed interest rate and is available on demand. If prevailing interest rates during the year (effectively nil) had been comparable with those prevailing in the prior year (approximately 0.1%), bank interest receivable of £nil (2020: £nil) would have been substantially unchanged. A further reduction in rates in the period would have had no material impact. 26 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 to £nil (2020: £63,525) for services supplied by Fairfax Perrin Limited of which M.H.W. Perrin is a Director and shareholder. The Company received by way of a fees £168,683 (2020: £152,340) from The Investment Company Plc, a company of which M.H.W Perrin is a Director and shareholder, in respect of investment management and custody services on an arm’s length basis. Directors transact share-dealing business with the Company under normal staff business terms and in accordance with applicable laws and regulations. In the year to 31 May 2021, commission earned from this by the Company amounted to £6,003 (2020: £4,213). During the year, the Directors each received no dividends attributable to their respective shareholdings, as disclosed in the Directors’ Report (2020: £nil). 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. FISKE plc Page 53 Notes to the Accounts continued 26 Related party transactions (continued) Key Management Personnel The Company paid fees amounting in total to £149,100 (2020: £139,860) to a company in which a key management person held a significant interest. The payments in question do not form part of the remuneration to directors in note 5. Directors’ balances The Directors’ trading balances have been included within trade receivables and payables and Directors’ current account balances are included in other payables/(receivables). Current account balance: C F Harrison (£4,541) (2020: £15,691) 27 Dilapidation provisions The Group is required to perform dilapidation repairs and in certain instances restore properties to agreed specifications prior to the properties being vacated at the end of their lease term. These amounts are based on estimates of repair and restoration costs at a future date and therefore a degree of uncertainty exists over the future outflows, given that these are subject to repair and restoration cost price fluctuations and the extent of repairs to be completed. These provisions are expected to be utilised within the next two years. Balance at 1 June 2020 Provided during the year Balance at 31 May 2021 Dilapidation provisions £’000 65 85 150 Page 54 FISKE plc Company Information DIRECTORS Clive Fiske Harrison Chairman James Philip Quibell Harrison Chief Executive Officer Tony Robert Pattison Martin Henry Withers Perrin* Alexander Rupert Fiske-Harrison * *Non-Executive REGISTERED OFFICE 3rd Floor, Salisbury House London Wall London EC2M 5QS REGISTERED NUMBER 02248663 LEI: 213800Z5PKJOV7GWXE43 AIM Listing Lon: FKE ISIN: GB0003353157 Sedol: 0335315 NOMINATED ADVISER Grant Thornton UK LLP 30 Finsbury Square London EC2A 1AG AUDITOR BDO LLP 55 Baker Street London W1U 7EU REGISTRARS Link Group Central Square 29 Wellington Street Leeds LS1 4DL FISKE plc Page 55 Company Information continued Details of the Directors and their backgrounds are as follows: Clive Fiske Harrison Chairman 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 retired from the role of Chief Executive following the AGM on 25 September 2015. James Philip Quibell Harrison Chief Executive Officer James Harrison joined Fiske plc 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. On 25 September 2015, following the AGM he was appointed as the Chief Executive Officer. He is a Chartered Fellow of the Chartered Institute of Securities and Investment and is responsible for the day to day running of the Company. Tony Robert Pattison Director Tony Pattison, is a Chartered Fellow of the Chartered Institute of Securities and Investment. During a City career spanning five decades, he has been actively involved at senior director level in the management of a number of investment companies including Fieldings Investment Management Limited which was acquired by Fiske plc in 2017. Until his retirement from the board in 2015 he was Chairman of Capital Gearing Trust plc. He continues to personally manage private client, charity and institution portfolios. Martin Henry Withers Perrin Non-Executive Martin Perrin joined the Board as a non-executive Director in November 2003. He is a chartered accountant with wide experience of operations and finance in industry. He is a Chartered Fellow of the Chartered Institute of Securities and Investment and is Chairman of the Audit Committee and the Risk Management Committee and is a member of the Remuneration and Nomination Committee. He is a Director of The Investment Company Plc. Alexander Rupert Fiske-Harrison Non-Executive Alexander Fiske-Harrison joined the Board as a non-executive Director in April 2014. He has previously worked for the Financial Times Group where he was involved in setting up the FT Magazine in 2003 and has also worked as a trainee stockbroker at Fiske plc. Alexander is currently a director of Mephisto Productions Limited, a company involved the production of film and theatre. Page 56 FISKE plc 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 on Friday 22 October 2021 at 12.30 pm 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 2021. 2. To re-elect Martin Henry Withers Perrin as a director of the Company. 3. To re-elect Clive Fiske Harrison as a director of the Company. 4. To re-appoint BDO 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 5 as an ordinary Resolution and as to Resolutions 6 and 7 as special Resolutions: 5. 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 £1,323,443 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. 6. 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 1,175,485; (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 57 Notice of Annual General Meeting continued 7. THAT the Directors be granted power pursuant to Section 570 and 573 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 5 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 £1,029,572; 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 T Stavrou Secretary 13 September 2021 Registered office: Salisbury House London Wall London EC2M 5QS Page 58 FISKE plc 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 their 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, Link Group, PXS1, Central Square, 29 Wellington Street, Leeds LS1 4DL, not less than two working days before the date of the Meeting or any adjournment thereof. Lodgement of a form of proxy would normally not prevent a member from attending and voting in person if so desired, but that will not be possible this year. 2. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (“Euroclear”) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or relates to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) by no later than two working days before the date of the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The CREST Manual can be reviewed at www.euroclear.com The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 3. Copies of contracts of service between the 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. FISKE plc Page 59 Notes to Notice of Annual General Meeting continued 4. 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 close of business two working days 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 close of business two working days 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. 5. 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. 6. By attending the Meeting members agree to receive any communications made at the meeting. Page 60 FISKE plc Park Communications – 45611