Fiske Regulatory News (FKE)

30 November 2020

FISKE PLC

("Fiske" or the "Company" or the "Group")

Final Results, Posting of Annual Report and Notice of AGM

Fiske (AIM:FKE) is pleased to announce its final audited financial results for the year ended 31 May 2020.

Highlights

James Harrison, CEO, commenting on the results said:

"We are pleased to report strong organic revenue growth of 17% in the year, with significant improvement in the net result. Resilient back office systems have helped us to be in a position where, on the face of it, the Covid-19 lockdown has not had much of an impact on our business."

In light of the current Covid-19 public gathering restrictions and social distancing requirements, the forthcoming Annual General Meeting which is to be held at Salisbury House, London Wall, London EC2M 5QS on Wednesday 23 December 2020 at 12.30pm, will be run as a closed meeting and shareholders will not be permitted to attend in person.

Copies of the 2020 Annual Report and Accounts, including the Notice of AGM and Proxy Voting form will be posted to shareholders today and in accordance with rule 26 of the AIM Rules for Companies, this information is also available under the Investor Relations section of the Company's website, www.fiskeplc.com.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information, please contact:

Fiske PLCJames Harrison (CEO) Tel: +44 (0) 20 8448 4700Salisbury House London Wall

London

EC2M 5QS

Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383 5100Samantha Harrison / Harrison Clarke 

Abridged Chairman's Statement

Trading

Full year revenues rose by 17% to £5.4m (2019: £4.6m). After reporting a pre-tax loss of £158,000 in the first half-year, we have made a profit of £31,000 in the second half which has resulted in a full year pre-tax loss of £127,000 (2019: loss £381,000).

On the face of it, the Covid-19 lockdown has not had much of an impact on our business. After an increase in revenues in the first half, they continued to grow in the second half of the year. This was assisted by strong commission revenue during a period of market volatility in the last quarter of our year, which coincided with the start of the Covid-19 lockdown.

Total revenue continues to be split evenly between commissions on trading, and management & other recurring fees, each increasing significantly during the year. This reflects both an increase in the firm's client base alongside a continued migration from commission-based relationships to more fee focussed ones. The impact of this was masked by a surge in commission income as active clients responded to the opportunities created during the market falls of February and March 2020.

Restatement of accounts

Following an internal audit exercise in the first half of the year, the directors of the company determined that certain adjustments needed to be made to its accounts. These result primarily from a change in an accounting process which had affected the way in which our systems data had been interpreted for accounting purposes. In addition, we resolved to change the way in which the acquisition of Fieldings Investment Management was accounted for.

There had been no impact on client money or accounts, and no impact on the firm's cash position. The overall impact had been an overstatement of current liabilities. The necessary adjustments, accumulated over several years, amounted to a net addition of some £532,000 to the Group's net assets as at 31 May 2019. Comparative data in this report has been restated and the adjustments elaborated in notes to the full published Report and Accounts.

Asset Management

In May 2020 our unit trust, Ocean UK Equity, passed its second anniversary. The first two years have been successful with the fund in the top quartile in each of the last three, six and twelve-month periods and since launch. It was also ahead of its benchmark the CBOE UK All Companies Total Return Index over the period. As at the end of May 2020 the fund was valued at £7.6m (2019: £5.8m).

Costs & Outturn

Operating expenses have risen by £0.7m to £5.7m in the year to 31 May 2020 (2019: £5.0m) an increase of 14%. Almost half of the increase comes from staff costs: in particular the administrative strengthening of operational capacity and compliance. We have also engaged external resources where appropriate to minimise long term increases in staff levels, and such consultancy has pushed up the operating expenses in the short term. However, such costs are expected to subside as we proceed through the current year.

Prior investment in disaster recovery resources and a migration to cloud services meant that the relatively sudden move to a Working-From-Home environment, at the onset of the Covid-19 lockdown, was achieved smoothly and with relatively little additional cost. This is not to belittle the very significant amount of staff endeavour that went into ensuring the migration proceeded as seamlessly as it did.

Euroclear

Historically, Euroclear has been an annual dividend payer but due to the timing of a re-domiciliation exercise Euroclear did not pay us a dividend during our prior year to 31 May 2019. The dividend stream has resumed in this financial year with a dividend received of £143,000.

The latest interim report from Euroclear shows that its business income advanced robustly by 13% but this was largely offset by the fall in interest received as a result of worldwide interest rate cuts. Despite a 5% increase in earnings per share we feel it appropriate to reflect recent transaction prices and have marked down the carrying value of our investment to €1,525 per share being £5.0m in total. This represents a partial roll-back of the very substantial valuation increases which we have seen in recent years.

Net assets

Shareholder's funds amount to some £7.4m and within this we continue to hold some £2.2m of cash.

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.

IFRS 16

The adoption of IFRS 16 from 1 June 2019, being applied to the accounting for our leased office premises, has resulted in the inclusion of £101,000 (after depreciation) of right-of-use assets in the Statement of Financial Position at 31 May 2020 together with a lease liability of £124,000. In the year to 31 May 2020, operating profit was increased by £47,000, which was matched by an increase in lease liability interest of £23,000, giving an overall £24,000 upside to the Income Statement. The opening balance impact is quantified in the Group Statement of Changes in Equity.

Dividend

The Board has resolved not to pay a dividend for the year to 31 May 2020 (2019: £nil).

Impact of Covid-19

We were fortunate that our disaster recovery infrastructure meant that we were very well placed to deal rapidly with the Working-From-Home requirement imposed by the Covid-19 lockdown. IT skills were polished, and the cultural change was adapted to quickly. This helped us stay focussed on investment decisions and client needs. Your Board is conscious that going forward there will be a range of challenges to address in relation to bringing staff back into an office-based working environment.

Staff

Considerable effort went into ensuring that the transition to Working-From-Home proceeded smoothly and resulted in an efficient work environment - on top of all the usual challenges in running a business. In this light I would like to extend my thanks to all members of the team for their hard work and commitment to the future success of the Company.

Markets

The last quarter of our own financial year has seen the fastest and sharpest falls in equity markets in a generation. In just twenty-two trading days equity markets fell by 30% or more. This was followed by an equally rapid and strong recovery with the US market, led by the performance of technology stocks, rising 36% from its March low and the UK market rising by 26%.

Around the world, government policy has been dominated by the need to contain the Covid-19 virus and at the same time lessen the severity of its economic impact. This has resulted in the provision of unprecedented levels of fiscal and monetary stimulus together with other supportive measures.

Last year I drew attention to the astonishing levels of debt being accumulated by companies and emerging market nations. This has now been dwarfed by the levels of debt assumed by mature sovereign entities which will eventually need to be addressed. The imposition of austerity measures would be unacceptable while economies are in such a precarious state. Politically the less painful reflationary option will no doubt prevail with longer term inflationary consequences.

Companies have meanwhile been preserving cash by deferring or cancelling dividend payments. Aggregate dividends in the UK are likely to fall by 30-40% this year. An unedifying prospect for savers and investors already adversely affected by the negligible returns available from cash deposits or government bonds.

It is likely that market volatility will persist for some time as there are a considerable number of unknowns to digest; the duration of the pandemic, the effectiveness of the global response, the impact on world GDP and the timing, shape and speed of an eventual recovery. What is clear is that both monetary and fiscal policy are likely to remain accommodative for some time to come and historically low interest rates to continue.

Outlook

The new financial year has begun with business levels in line with the previous year just reported. With the expectation that most of the exceptional costs incurred last year will not be repeated in the current year, your Board is encouraged by the progress made in the first few months of trading.

AGM

In light of the current Covid-19 public gathering restrictions and social distancing requirements, the forthcoming AGM which is to be held on Wednesday 23 December 2020 at 12.30pm, will be run as a closed meeting and shareholders will not be permitted to attend in person.

Shareholders' views are important and the Board encourages shareholders to submit their votes via CREST ID rather than attending the meeting in person. 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 above.

Consolidated Statement of Total Comprehensive Income

For the year ended 31 May 2020

All results are from continuing operations.

Consolidated Statement of Financial Position

31 May 2020

These financial statements were approved by the Board of Directors and authorised for issue on 27 November 2020.

Group Statement of Changes in Equity

For the year ended 31 May 2020

Group and Parent Company Statement of Cash Flows

For the year ended 31 May 2020

Notes to the Accounts

For the year ended 31 May 2020

1. 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 2020 as adopted by the European Union and International Financial Reporting Interpretations Committee and with the Companies Act 2006. The Group financial statements have been prepared under the historical cost convention, with the exception of financial instruments, which are stated in accordance with IAS 39 Financial Instruments: recognition and measurement.

The financial information included in this News Release does not constitute statutory accounts of the Group for the years ended 31 May 2020 and 2019, but is derived from those accounts. Statutory accounts for the year ended 3 May 2019 have been reported on by the Group's auditor and delivered to the Registrar of Companies. Statutory accounts for the year ended 3 May 2020 have been audited and will be delivered to the Registrar of Companies. The report of the auditors for both years was (i) unqualified, (ii) included a reference the prior year restatement to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

Copies of the Annual Report will be sent on 30 November 2020 to shareholders and will also be available on our website at www.fiskeplc.com

With the exception of IFRS 16, adopted in the current year, there have been no significant changes in accounting policies from those set out in the Fiske plc 2019 Annual Report.

2. 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:

Substantially all revenue in the current and prior year is generated in the UK and derives solely from the provision of financial intermediation.

3. Tax

Analysis of tax on ordinary activities:

Factors affecting the tax charge for the year

The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, is 19.00% (2019: 19.00%).

The charge/(credit) for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:

4. 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.

5. Intangible assets arising on consolidation

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:

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 8 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:

Had the discount rate used gone up / down by 1%, impairment would have been £7,000 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.

6. Other intangible assets

7. Right-of-use assets

8. Property, plant and equipment

9. Investments held at Fair Value Through Other Comprehensive Income

The investments included above are represented by holdings of equity securities. These shares are not held for trading.

10. Trade and other receivables

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

Trade receivables

Included in the Group's trade receivables are debtors with a carrying amount of £nil (2019: £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 £150,000 (2019: £338,000) which are past due but not considered impaired.

Ageing of counterparty receivables:

11. Trade and other payables

12. Lease liabilities

Lease liabilities at adoption of IFRS 16 on 1 June 2019 can be reconciled to the operating lease commitments in respect of land and buildings reported at May 2019 as follows:

The cash flow impact is summarised as:

13. Deferred taxation

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 18%, being the anticipated rate of taxation applicable to the Company in the future.

†A further deferred tax asset arising out of cumulative tax losses amounting to £97,036 has not been recognised at the balance sheet date.

14. Called up share capital

Included within the allotted and fully paid share capital were 9,490 ordinary shares of 25p each (2019: 9,490 ordinary shares of 25p each) held for the benefit of employees.

At 31 May 2020 there were 200,000 outstanding options to subscribe for ordinary shares at a weighted average exercise price of 55p (2019: 60p) and a weighted average remaining contractual life of 3 years, 9 months. (2019: 4 years, 7 months)

15. Financial commitments

Lease - classified as an IFRS 16 lease

At 31 May 2020 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

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.

16. Clients' money

At 31 May 2020 amounts held by the Company on behalf of clients in accordance with the Client Money Rules of the Financial Conduct Authority amounted to £56,624,640 (2019: £46,014,796). The Company has no beneficial interest in these amounts and accordingly they are not included in the consolidated statement of financial position.