Contents. 1 Summary information and highlights. 2 Interim management report. 6 Condensed consolidated income statement

Transcription

1 Cenkos Securities plc Interim Report 2016

2 Contents 1 Summary information and highlights 2 Interim management report 6 Condensed consolidated income statement 7 Condensed consolidated statement of comprehensive income 8 Condensed consolidated statement of financial position 9 Condensed consolidated cash flow statement 10 Condensed consolidated statement of changes in equity 11 Notes to the condensed consolidated financial statements 26 Independent review report 27 Information for shareholders

3 Summary information Cenkos Securities plc (the Company or Cenkos ) together with its subsidiaries (the Group ) is an independent, specialist institutional securities group, focused on small and mid-cap companies and investment funds. The Company s principal activity is institutional stockbroking. Cenkos shares are admitted to trading on the AIM Market of the London Stock Exchange ( LSE ). The Company is authorised and regulated by the Financial Conduct Authority ( FCA ) and is a member of the LSE. Financial highlights 30 June 30 June Revenue 71% 15.3m 53.1m Profit before tax 91% 1.7m 18.6m Cash 58% 20.1m 48.2m Basic earnings per share 95% 1.2p 26.1p Interim dividend per share declared 86% 1.0p 7.0p Commenting on the interim results, Chief Executive Officer Jim Durkin noted: Our successful strategy of being a leading UK institutional broker to growth companies and investment funds has led to us being profitable in every year since our formation in 2005 and this continued into the first half of 2016 in spite of very difficult market conditions which meant a number of significant fundraisings slipped into the second half of Since formation in 2005 we have raised in excess of 15 billion of equity capital for our clients. We believe that, as one of the leading brokers in London for growth companies, we are well-placed to benefit from improvements in market conditions and have made a good start to the second half of the year. There is institutional demand to fund high quality companies and ideas and since July we have been engaged in relation to a number of significant fundraisings and our current pipeline is encouraging. For further information contact: Jim Durkin Chief Executive Officer Cenkos Securities plc Dr Azhic Basirov / David Jones / Ben Jeynes Nominated Adviser Smith & Williamson Corporate Finance Limited David Rydell / Duncan Mayall / James Newman Bell Pottinger 1

4 Interim Management Report Review of performance Overall performance I am pleased to report that despite a much reduced level of revenue, we remained profitable and delivered 1.7 million of pre-tax profits in the six months ending 30 June Against a tough market environment, we continue to demonstrate the strength of our equity placing capabilities and raised a total of 529m in aggregate for our clients in H Indeed, we have now raised in excess of 15.1 billion of equity for clients mainly acting as sole broker over our 11 year history. H s results benefited from 26.7m of revenue from one large fundraising transaction, which did not reoccur in H Excluding this, H s revenues fell 42% on the back of lower fundraisings and a number of significant fundraisings slipping into H This was also reflected in lower performance-related pay. Profit before tax was 1.7 million (H1 2015: 18.6 million) and basic earnings per share fell to 1.2p (H1 2015: 26.1p). Revenues Revenue for the period decreased by 71% to 15.3 million (H1 2015: 53.1 million). In H we raised 529 million for our clients (H1 2015: 2,020 million including 1,029 million for BCA Marketplace plc). Excluding the impact of this large deal in 2015, the 42% fall in revenues reflects quieter equity markets including AIM than those experienced in H Against the backdrop of the Brexit vote and wider European macro-economic uncertainty, total funds raised by AIM companies fell by 30% to 1,931 million in H1 2016, when compared to H (source: LSE AIM factsheet June 2016). We remain ranked as one of the leading brokers in London for growth companies, as demonstrated by Adviser Rankings Limited s July 2016 AIM Adviser Rankings Guide where we were ranked number 2 Nominated Adviser by number of AIM clients and number 3 Nominated Adviser (by client market capitalisation). We were also ranked top Nominated Adviser for Oil and Gas, top stockbroker (by client market capitalisation) for Industrials, joint top stockbroker for Consumer Services (by number of clients) and number 3 Nominated Adviser for Technology companies (by number of AIM clients). The size of our corporate client base (where the Company is retained as Nominated Adviser / broker and / or financial adviser) fell slightly to 119 at 30 June 2016 (H1 2015: 125). We make markets in the securities of all the companies where we have a broking relationship to support the other services we provide to our clients. We actively provide liquidity to the market and facilitate institutional business in both small and large-cap equities. Our trading desks now make markets in the shares of 339 (H1 2015: 342) companies and investment funds. Importantly, we maintained a top three market share in 70% of our clients shares and the top market share in 44%. Costs Costs fell 60% to 13.7 million in the period, primarily due to lower performance-related pay on the back of lower levels of revenue. Additionally, in August 2016 we were fined 530,500 by the FCA for regulatory breaches following an investigation into the Company s role as sponsor to Quindell plc ( Quindell ) (now known as Watchstone Group plc) in relation to Quindell s planned move from AIM to the premium segment of the main market of the LSE in June 2014 and into the Company s systems and controls in relation to its sponsor services. We have accrued for this cost in these results, and incurred costs in H (and in prior years) to address the issues raised by the FCA. The FCA s investigation of the Company was concluded in August 2016, with the FCA acknowledging the extensive remediation programme undertaken by the Company in order to enhance and improve its systems and controls in relation to its sponsor services. See note 16 to these results. 2

5 We also incurred an expense of 0.9 million (H1 2015: 2.1 million) due to staff costs resulting from the Compensatory Award Phantom Dividend Plan 2009 (the CAP ). Payments under this scheme are triggered only by the payment of a dividend to ordinary shareholders. A CAP cost was incurred during the period as a result of the second interim and final dividend for 2015 totalling 7p paid in H This compares to a H CAP cost incurred in respect of a 10p 2014 final dividend. We are pleased to report that we have now formally opened our Singapore office the Monetary Authority of Singapore approved Cenkos Securities Asia Pte. Ltd s application for a Capital Markets Services Licence on 27 June Our Singapore office will help facilitate flows between Asia and the UK. In particular, we plan to use this office to assist our clients in capital raising in the region, to help Asian corporates raise capital and to help Asian corporates sell or list their UK assets. Profit and earnings per share Profit before tax decreased by 91% to 1.7 million (H1 2015: 18.6 million) and profit after tax decreased by 96% to 0.7 million (H1 2015: 14.6 million). Our basic earnings per share ( EPS ) fell by 95% to 1.2p. Statement of consolidated financial position and cash flow At 30 June 2016, our net trading investments were 6.6 million (H1 2015: 6.5 million), and cash held was 20.1 million (H1 2015: 48.2 million). During the six months to 30 June 2016 there was a net decrease in cash and cash equivalents of 13.0 million. This is largely due to the payment of accrued bonuses in respect of 2015, the 2015 second interim and 2015 final dividend (totalling 7p per share) and corporation tax payments which were offset partly by operating cash flows in H Dividend and capital levels We aim to retain sufficient capital and reserves to meet our regulatory capital and cash requirements after taking account of the likely future working capital needs and potential growth requirements. Since our flotation on AIM in October 2006, we have paid out 115.5p in dividends (prior to the 1p proposed interim dividend for 2016) and bought back 19.5 million shares at a cost of 25.4 million for cancellation, thereby increasing the Group s prospective earnings per share. We have therefore returned million of cash to shareholders, equivalent to 154.8p per share (before 2016 s interim dividend) since our flotation in The Board proposes an interim dividend of 1p per share reflecting the earnings per share of H The payment of this interim dividend will trigger payments to staff under the CAP of 0.1 million in H (H2 2015: 1.0 million). The dividend will be paid on 7 November 2016 to all shareholders on the register at 7 October On 28 April 2016 Cenkos announced that the trustees of the Cenkos EBT had launched a share purchase plan to buy up to 50,000 of Cenkos shares a month. 102,000 shares were purchased in H under this plan at a cost of 142,571. The increase in the size of the Company s EBT reflects, in part, the potential future demand for Cenkos shares to satisfy share awards under the Company s 2015 deferred bonus scheme. People We continue to look to recruit staff who are attracted by our culture and business model, and are pleased that we now have five highly experienced staff in our newly licensed Singapore office. Since the beginning of the year up to the date of this report, we have also recruited in the UK a deputy head of sponsor services, as well as a number of analysts and sales executives. 3

6 Interim Management Report continued Principal risks and uncertainties Given the results of the Brexit referendum, there is increased uncertainty in equity markets and we continue to monitor the situation. Aside from this, the principal risks and uncertainties that Cenkos currently faces, and how these are managed, have not materially changed from those outlined in the Strategic Report section of our 2015 Annual Report, namely the health of UK equity markets as well as reputational, operational, regulatory, conduct and market risk. Notwithstanding these, the key changes that may impact Cenkos risk profile over the next six months and how they are being managed relate to: The pace of change in the regulatory environment we continue to focus heavily on our regulatory risks to ensure the appropriate systems and controls, reporting, capital and liquidity requirements, resources, conduct and culture are all in place to meet the ongoing obligations of an FCA regulated (IFPRU investment) firm; and Ensuring that we continue to retain and attract high quality staff. Outlook We have made a good start to the second half of the year. There is institutional demand to fund high quality companies and ideas. Since July we have been engaged in relation to a number of significant fundraisings and our pipeline for the rest of the year is encouraging. Jim Durkin Chief Executive Officer 21 September

7 Responsibility statement We confirm that to the best of our knowledge: a) The condensed set of financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of Cenkos Securities plc and the undertakings included in the consolidation taken as a whole as at 30 June 2016; and b) The interim management report includes a fair review of the development and performance of the business and the position of Cenkos Securities plc and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that the Group faces. Forward-looking statements These financial statements contain forward-looking statements with respect to the financial condition, results, operations and businesses of the Group. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Such statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors current view and information known to them at the date of this statement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 5

8 Condensed consolidated income statement for the six months ended 30 June 2016 Unaudited Unaudited Six months Six months Audited ended ended Year ended Note 30 June 30 June 31 December Continuing operations Revenue 2 15,344 53,115 76,513 Administrative expenses (13,726) (34,607) (56,751) Operating profit 1,618 18,508 19,762 Investment income interest income Interest expense (3) (4) Profit before tax from continuing operations 1,650 18,570 19,896 Tax 3 (997) (3,936) (4,525) Profit after tax ,634 15,371 Attributable to: Equity holders of Cenkos Securities plc ,634 15,371 Basic earnings per share 5 1.2p 26.1p 27.2p Diluted earnings per share 5 n/a 24.1p 26.8p 6

9 Condensed consolidated statement of comprehensive income for the six months ended 30 June 2016 Unaudited Unaudited Six months Six months Audited ended ended Year ended 30 June 30 June 31 December Profit ,634 15,371 Amounts that will be recycled to income statement in future periods Gain / (loss) on available-for-sale financial assets 38 (2) (2) Tax on available-for-sale financial assets (7) Exchange differences on translation of foreign operations 83 Other comprehensive income 114 (2) (2) Total comprehensive income ,632 15,369 Attributable to: Equity holders of Cenkos Securities plc ,632 15,369 7

10 Condensed consolidated statement of financial position as at 30 June 2016 Unaudited Unaudited Audited Notes 30 June 30 June 31 December Non-current assets Property, plant and equipment Deferred tax asset ,151 1, ,531 1,626 Current assets Trade and other receivables 7 26,810 37,103 18,354 Available-for-sale financial assets Other current financial assets 8 8,316 10,844 12,706 Cash and cash equivalents 9 20,067 48,218 33,106 55,640 96,724 64,725 Total assets 56,341 99,255 66,351 Current liabilities Trade and other payables 10 (28,500) (55,224) (34,881) Other current financial liabilities 8 (1,715) (4,341) (2,551) (30,215) (59,565) (37,432) Net current assets 25,425 37,159 27,293 Non-current liabilities Trade and other payables 10 (521) (351) Total liabilities (30,736) (59,565) (37,783) Net assets 25,605 39,690 28,568 Equity Share capital Share premium 3,334 2,061 3,321 Capital redemption reserve Own shares 13 (3,280) (3,203) (3,193) Available-for-sale reserve Foreign currency translation reserve 83 Retained earnings 24,573 39,981 27,576 Total equity 25,605 39,690 28,568 8

11 Condensed consolidated cash flow statement for the six months ended 30 June 2016 Unaudited Unaudited Six months Six months Audited ended ended Year ended Notes 30 June 30 June 31 December Profit after tax ,634 15,371 Adjustments for: Net finance income (32) (61) (134) Tax expense 997 3,936 4,525 Depreciation of property, plant and equipment Gain / (loss) on available-for-sale financial assets 31 (2) (2) Exchange differences on translation of foreign operations 80 Shares and options received in lieu of fees (1,232) (4,967) Transfer of shares from SIP to employees 18 Share-based payment expense Operating cash flows before movements in working capital 2,147 17,718 15,536 Decrease in net trading investments 3,666 2,204 2,285 (Increase) / decrease in trade and other receivables (8,459) (17,377) 1,367 (Decrease) / increase in trade and other payables (4,475) 30,849 12,538 Net cash flow from operating activities before interest and tax paid (7,121) 33,394 31,726 Interest paid (3) (4) Tax paid (1,939) (2,837) (5,049) Net cash flow from operating activities (9,060) 30,554 26,673 Investing activities Interest received Purchase of property, plant and equipment 6 (103) (65) (174) Reclassification of stamp duty 58 Net cash (outflow) / inflow from investing activities (68) (9) 17 Financing activities Dividends paid (3,819) (5,656) (9,740) Proceeds from issue of own shares 1,847 3,099 Proceeds from sale of own shares to employee share plans Acquisition of own shares by EBT (143) Acquisition of own shares for cancellation (10,767) (18,777) Acquisition of CAP options cancelled as part of tender offer buy-back (698) (1,145) Net cash used in financing activities (3,911) (15,259) (26,516) Net (decrease) / increase in cash and cash equivalents (13,039) 15, Cash and cash equivalents at beginning of period 33,106 32,932 32,932 Cash and cash equivalents at end of period 9 20,067 48,218 33,106 The figures for the six months ended 30 June 2013 have been restated to reflect the transfer of the nominal value of the shares purchased and cancelled by the Company to capital redemption reserve. 9

12 Condensed consolidated statement of changes in equity for the six months ended 30 June 2016 Foreign Capital Available- currency Share Share redemption Own for-sale translation Retained capital premium reserve shares reserve reserve earnings Total 000 s 000 s Balance at 1 January (3,218) ,713 39,561 Profit 14,634 14,634 Loss on available-for-sale financial assets net of tax (2) (2) Total comprehensive income (2) 14,634 14,632 Shares issued in the period 19 1,829 1,848 Transfer of shares to employee share plans Acquisition of own shares for cancellation (57) 57 (10,767) (10,767) Charge to equity for cancelled CAP options (698) (698) Credit to equity for equity-settled share-based payments Deferred tax on share-based payments Current tax on share-based payments Dividends paid (5,656) (5,656) Balance at 30 June , (3,203) ,981 39,690 Profit Total comprehensive income Shares issued in the period 13 1,238 1,251 Transfer of shares to employee share plans Acquisition of own shares for cancellation (45) 45 (8,010) (8,010) Charge to equity for cancelled CAP options (447) (447) Credit to equity for equity-settled share-based payments Deferred tax on share-based payments (942) (942) Current tax on share-based payments Dividends paid (4,084) (4,084) Balance at 31 December , (3,193) ,576 28,568 Retained profit Gain on available-for-sale financial assets net of tax Exchange differences on translation of foreign operations Total comprehensive income Transfer of shares to employee share plans Transfer of shares to employees 18 (18) Acquisition of own shares (143) (143) Credit to equity for equity-settled share-based payments Deferred tax on share-based payments (153) (153) Dividends paid (3,819) (3,819) Balance at 30 June , (3,280) ,573 25,605 10

13 Notes to the condensed consolidated financial statements 1. Accounting policies General information The interim condensed consolidated financial statements of Cenkos Securities plc. ( Cenkos or the Company ) together with its subsidiaries (the Group ) for the six months ended 30 June 2016 are unaudited and were approved by the Board of Directors for issue on 21 September The Company is incorporated in the United Kingdom under the Companies Act 2006 (company registration No ), and its shares are publicly traded. The Company s principal activity is as an institutional stockbroker to UK small and mid-cap companies and investment funds. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates. The preparation of financial statements in conformity with international financial reporting standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management s best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates. These financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. Where appropriate prior year figures have been restated to conform to the current year presentation. Basis of accounting The interim condensed consolidated financial statements for the six months ended 30 June 2016 have been prepared in accordance with International Accounting Standard ( IAS ) 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group s annual financial statements for the year ended 31 December The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group s annual financial statements for the year ended 31 December 2015, which are prepared in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the European Union. The financial information contained in these interim condensed consolidated financial statements does not constitute the Group s statutory accounts within the meaning of section 434 of the Companies Act The comparative information contained in this report for the year ended 31 December 2015 does not constitute the statutory accounts for that financial period. Those accounts have been reported on by the Company s auditors Ernst & Young LLP and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act Going concern The Group s business activities, together with the factors likely to affect its future development and performance, its principal risks and uncertainties, the financial position of the Group, its cash flows and liquidity position are set out in the Strategic Report in the Group s Annual Report for the year ended 31 December The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, the Directors continue to adopt a going concern basis in preparing the interim financial statements. Adoption of new and revised standards During the period, a number of amendments to IFRS became effective and were adopted by the Group, none of which had a material impact on the Group s net cash flows, financial position, statement of comprehensive income or earnings per share. 11

14 Notes to the condensed consolidated financial statements continued 2. Business and geographical segments Cenkos is managed as an integrated UK institutional stockbroking business and although it has different revenue streams, the nature of its activities is considered to be subject to similar economic characteristics. The internal reports used by the Chief Executive Officer for the purpose of monitoring performance and allocating resources reflect that Cenkos is managed as a single business unit. Revenue is wholly attributable to the principal activity of the Company and arises solely within the UK. Major clients In the six months ended 30 June 2016, one of Cenkos clients contributed more than 10% of Cenkos total revenue. The amount was 2.69 million (six months ended 30 June 2015: million; year ended 31 December 2015: million). Revenue streams Six months Six months ended ended Year ended 30 June 30 June 31 December Corporate finance and placing fees 9,675 43,075 60,069 Corporate broking, market-making, research and commission revenue 5,669 10,040 16,444 15,344 53,115 76, Tax Six months Six months ended ended Year ended 30 June 30 June 31 December The tax charge comprises: Current tax United Kingdom corporation tax at 20% (2015: 20.25%) based on the profit for the period 203 4,006 4,639 Adjustment in respect of prior period United Kingdom corporation tax at 20% (2015: 20.25%) 76 Total current tax 203 4,006 4,715 Deferred tax Charge / (credit) on account of temporary differences 794 (70) (112) Deferred tax prior period adjustment (78) Total deferred tax (refer to note 11) 794 (70) (190) Total tax on profit on ordinary activities from continuing operations 997 3,936 4,525 12

15 3. Tax continued The tax charge for the period differs from that resulting from applying the standard rate of UK corporation tax of 20% (2015: 20.25%) to the profit before tax for the reasons set out in the following reconciliation: Six months Six months ended ended Year ended 30 June 30 June 31 December Profit before tax from continuing operations 1,650 18,570 19,896 Tax on profit on ordinary activities at the UK corporation tax rate of 20% (2015: 20.25%) 330 3,760 4,029 Tax effect of: Non-deductible expenses for tax purposes Current year losses of overseas subsidiary for which no deferred tax asset has been recognised Share-based payments Deferred tax rate change adjustment (42) Adjustment in respect of prior period deferred tax (78) Adjustment in respect of prior period current tax 76 Tax expense for the period 997 3,936 4,525 In addition to the tax expense presented in the income statement, the following amounts have been recognised directly in equity: Six months Six months ended ended Year ended 30 June 30 June 31 December Other Comprehensive Income (OCI) Current tax expense arising on available-for-sale financial asset 7 Statement of Changes in Equity (SOCIE) Current tax credit arising on share-based payments (377) (555) Deferred tax charge / (credit) arising on share-based payments 153 (39) 903 Total income tax recognised directly in equity 160 (416) Dividends Six months Six months ended ended Year ended 30 June 30 June 31 December Amounts recognised as distributions to equity holders in the period: Second interim dividend for the year ended 31 December 2015 of 6.0p (2014: nil) per share 3,269 Final dividend for the year ended 31 December 2015 of 1.0p (2014: 10p) per share 550 5,656 5,656 Interim dividend for the period to 30 June 2015 of 7.0p (June 2014: 7.0p) per share 4,084 3,819 5,656 9,740 13

16 Notes to the condensed consolidated financial statements continued 4. Dividends continued The proposed interim dividend for 30 June 2016 of 1.0p (30 June 2015: 7.0p) per share was approved by the Board on 21 September 2016 and has not been included as a liability as at 30 June The dividend will be payable on 7 November 2016 to all shareholders on the register at 7 October Under the Compensatory Award Plan ( CAP ), as described in the 2015 Annual Report, the payment of a dividend to ordinary shareholders will trigger a cash payment to holders of options under the CAP. The payment of this interim dividend will increase staff costs by 0.12 million in the second half of 2016 (7.0p 2015 interim dividend increased staff costs by 0.99 million in the second half of 2015). 5. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: Six months Six months ended ended Year ended 30 June 30 June 31 December Basic earnings per share 1.2p 26.1p 27.2p Diluted earnings per share n/a 24.1p 26.8p For the period ended 30 June 2016, the share options were antidilutive due to the interaction of the dividends paid in the period and the share price. Earnings Earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent ,634 15,371 Effect of dilutive potential ordinary shares: Share options Earnings for the purpose of diluted earnings per share ,130 15,869 No. No. No. Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share 54,421,225 56,046,643 56,512,222 Effect of dilutive potential ordinary shares: Share options 1,538,733 4,750,534 2,804,098 Weighted average number of ordinary shares for the purpose of diluted earnings per share 55,959,958 60,797,177 59,316,320 14

17 5. Earnings per share continued The Board has agreed to continue to fund the Company s Employee Benefit Trust ( EBT ) so that it can make market purchases in Cenkos Securities plc shares as and when market conditions allow. During the period, 102,000 shares were purchased at an aggregate consideration of 0.14 million (2015: no further shares were purchased). In addition, 608,430 shares (30 June 2015: 14,323 shares, 31 December 2015: 25,400 shares) were transferred out of the EBT at average cost to the Cenkos Securities plc Share Incentive Plan Trust to satisfy awards under that scheme and dividends earned which were reinvested by employees in further shares. As at 30 June 2016 the EBT held a total of 2,279,200 (30 June 2015: 2,796,707, 31 December 2015: 2,785,630) ordinary shares at an aggregate consideration of 2.37 million (30 June 2015: 2.86 million, 31 December 2015: 2.85 million). These shares held by the EBT have been excluded from the weighted average number of shares calculation up to this date. As at 30 June 2016 the Cenkos Securities plc Share Incentive Plan Trust held a total of 892,166 (30 June 2015: 338,174, 31 December 2015: 338,174) Free and Matching ordinary shares at an aggregate consideration of 0.91 million (30 June 2015: 0.35 million, 31 December 2015: 0.35 million). As at 30 June 2016, in total these trusts held 3,171,366 (30 June 2015: 3,134,881 shares, 31 December 2015: 3,123,804 shares) at an aggregate consideration of 3.28 million (30 June 2015: 3.20 million, 31 December 2015: 3.19 million) as shown in note Property, plant and equipment During the period, the Group spent approximately 102,864 (30 June 2015: 64,581, 31 December 2015: 174,249) on property, plant and equipment. This mostly related to the purchase of IT equipment. 7. Trade and other receivables 30 June 30 June 31 December Current assets Financial assets Market and client receivables 23,833 34,794 15,458 Loans due from staff Accrued income 1, ,435 Other receivables ,792 36,178 17,606 Non-financial assets Prepayments 1, ,810 37,103 18,354 As at 30 June 2016 the ageing analysis of trade and other receivables is as follows: Neither past due nor Past due but not impaired Total impaired < 30 days days days > 91 days 30 June ,810 24,971 1, June ,103 31,215 4,062 1, December ,354 15,627 2,

18 Notes to the condensed consolidated financial statements continued 8. Other current financial assets and liabilities 30 June 30 June 31 December Financial assets at FVTPL Trading investments carried at fair value 8,223 10,769 12,604 Derivative financial assets share options and warrants ,316 10,844 12,706 Financial liabilities at FVTPL Contractual obligation to acquire securities (1,715) (4,341) (2,551) Gains / losses from financial assets and liabilities at FVTPL are included within Revenue in the condensed consolidated income statement. 9. Cash and cash equivalents 30 June 30 June 31 December Cash and cash equivalents 20,067 48,218 33, Trade and other payables 30 June 30 June 31 December Current liabilities Financial liabilities Trade creditors 19,317 24,337 9,727 Other creditors ,652 24,967 10,594 Non-financial liabilities Accruals and deferred income 8,642 26,634 22,345 Corporation tax payable 206 3,623 1,942 8,848 30,257 24,287 28,500 55,224 34,881 Non-current liabilities Non-financial liabilities Cash-settled deferred bonus scheme

19 11. Deferred tax Deferred tax arises on all taxable and deductible temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The following are the deferred tax assets and liabilities recognised by the Group and the Company and the movement thereon during the current and prior reporting periods. Group and Company temporary differences Bonus Property, Sharepayments plant and based deferred equipment payments Total 000 s At 31 December ,794 2,042 Reversal and origination of temporary differences credit / (expense) 143 (11) (62) 70 Deferred tax credit to equity At 30 June (5) 1,771 2,151 Reversal and origination of temporary differences credit / (expense) (168) 43 Deferred tax prior year adjustment credit Deferred tax charge to equity (942) (942) At 31 December ,330 Origination of temporary differences expense (198) (13) (584) (795) Deferred tax charge to equity 1 (153) (152) At 30 June (5) (76) 383 A 21% corporate tax rate came into effect from 1 April 2014 and fell to 20% with effect from 1 April In the Summer Budget 2015 the Government announced a further reduction in the main rate of corporation tax to 19% from 1 April 2017 and 18% from 1 April These changes were substantially enacted on 18 November This will reduce the Company s future current tax charge accordingly. The deferred tax balances at 30 June 2016 have been stated at 19% as this is the expected prevailing rate when the individual temporary differences are expected to reverse. The Group has unutilised capital losses on which a deferred tax asset has not been recognised as future utilisation of the losses is dependent on future chargeable gains. The unrecognised deferred tax asset in respect of capital losses carried forward is gross 302,261 (net 57,430 at 19%). In addition, during the period, Cenkos Securities Asia Pte. Ltd. incurred costs of 276,308 but has only just started to trade. A deferred tax asset has not been recognised as future utilisation of the losses is dependent on future taxable profits which are uncertain. The unrecognised deferred tax asset in respect of the overseas subsidiary s trading losses carried forward is gross 851,875 (net 144,819 at 17%). 17

20 Notes to the condensed consolidated financial statements continued 12. Share capital The issued share capital as at 30 June 2016 amounted to 566,948 (30 June 2015: 598,767, 31 December 2015: 566,948). 1 January 2015 to 31 December 2015 Date Ordinary shares of 1p each Event 09 January ,727,340 were cancelled tender offer to buy-back shares 16 April ,000 were issued exercise of 35,000 LTIP options 21 April ,000 were issued exercise of 200,000 LTIP options 22 April ,000 were issued exercise of 750,000 LTIP options 24 April ,000 were issued exercise of 190,000 LTIP options 27 April ,000 were issued exercise of 100,000 LTIP options 28 April ,000 were issued exercise of 100,000 LTIP options 29 April ,000 were issued exercise of 10,000 LTIP options 11 May ,000 were issued exercise of 150,000 LTIP options 27 May ,000 were issued exercise of 85,000 LTIP options 01 June ,000 were issued exercise of 10,000 LTIP options 08 June ,000 were issued exercise of 25,000 LTIP options 11 June ,000 were issued exercise of 140,000 LTIP options 16 June ,000 were issued exercise of 97,000 LTIP options 02 July ,000 were issued exercise of 95,000 LTIP options 16 July ,000 were issued exercise of 25,000 LTIP options 17 August ,000 were issued exercise of 25,000 LTIP options 21 September ,000 were issued exercise of 100,000 LTIP options 22 September ,000 were issued exercise of 515,000 LTIP options 24 September ,000 were issued exercise of 25,000 LTIP options 29 September ,000 were issued exercise of 450,000 LTIP options 30 September ,000 were issued exercise of 33,000 LTIP options 29 November ,450,000 were cancelled tender offer to buy-back the shares 1 January 2016 to 30 June 2016 There were no shares issued or cancelled during the period. 18

21 13. Own shares Own shares represent the cost of shares purchased by the Company s Employee Benefit Trust ( EBT ) and those transferred to the Cenkos Securities plc Share Incentive Plan ( SIP ). The EBT was established by the Company in It is funded by the Company and has the authority to acquire Cenkos Securities plc shares. During the period, 102,000 shares were purchased at an aggregate consideration of 0.14 million (2015: no further shares were purchased). In addition, 608,430 shares (30 June 2015: 14,323 shares, 31 December 2015: 25,400 shares) were transferred out of the EBT at average cost to the Cenkos Securities plc Share Incentive Plan Trust to satisfy awards under that scheme and dividends earned which were reinvested by employees in further shares. As at 30 June 2016 the EBT held a total of 2,279,200 (30 June 2015: 2,796,707, 31 December 2015: 2,785,630) ordinary shares at an aggregate consideration of 2.37 million (30 June 2015: 2.86 million, 31 December 2015: 2.85 million). These shares held by the EBT have been excluded from the weighted average number of shares calculation up to this date. As at 30 June 2016 the Cenkos Securities plc Share Incentive Plan Trust held a total of 892,166 (30 June 2015: 338,174, 31 December 2015: 338,174) Free and Matching ordinary shares at an aggregate consideration of 0.91 million (30 June 2015: 0.35 million, 31 December 2015: 0.35 million). As at 30 June 2016, in total these trusts held 3,171,366 (30 June 2015: 3,134,881 shares, 31 December 2015: 3,123,804 shares) at an aggregate consideration of 3.28 million (30 June 2015: 3.20 million, 31 December 2015: 3.19 million). Six months ended Six months ended Year ended 30 June June December 2015 Number Number Number Shares held by EBT of shares 000 s of shares 000 s of shares 000 s At 1 January 2,785,630 2,847 2,811,030 2,872 2,811,030 2,872 Acquired during the period 102, Transferred to Cenkos Securities plc Share Incentive Plan Free shares (292,160) (298) Matching shares (279,590) (285) Dividend reinvestment (36,680) (38) (14,323) (15) (25,400) (25) At the period ended 2,279,200 2,369 2,796,707 2,857 2,785,630 2,847 Free and Matching shares held by Cenkos Securities plc Number Number Number Share Incentive Plan of shares 000 s of shares 000 s of shares 000 s At 1 January 338, , , Transferred from the EBT Free shares 292, Matching shares 279, Shares transferred to employees (17,758) (18) At the period ended 892, , , Own shares held at the period ended 3,171,366 3,280 3,134,881 3,203 3,123,804 3,193 19

22 Notes to the condensed consolidated financial statements continued 14. Financial instruments Risk management objectives For further information relating to the principal risks faced by the Group and how it mitigates and manages this exposure please refer to the Strategic Report in the 2015 Annual Report. Externally imposed capital requirement The Company has to retain sufficient capital to satisfy the UK Financial Conduct Authority s ( FCA ) capital requirements. These requirements vary from time to time depending on the business conducted by the Company. The Company always retains a buffer above the FCA minimum requirements and has complied with these requirements during and subsequent to the period under review. As at 30 June 2016, Cenkos Securities plc had a solvency ratio of 172% (30 June 2015: 170%, 31 December 2015: 208%). Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 of the Group s financial statements for the year ended 31 December The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values. For further information concerning the Group s financial assets and liabilities please refer to notes 7, 8 and 10. Fair value hierarchy All financial instruments carried at fair value are categorised in three categories, defined as follows: Level 1 Quoted market prices Level 2 Valuation techniques (market observable) Level 3 Valuation techniques (non-market observable) The Group held the following financial instruments measured at fair value: Level 1 Level 2 Level 3 Total As at 30 June s Available-for-sale financial assets Financial assets at FVTPL Derivative financial assets Trading investments carried at fair value 8,223 8,223 8, ,316 8, ,763 Financial liabilities at FVTPL Contractual obligation to acquire securities 1,715 1,715 There were no transfers between Level 1, 2 and 3 during the period. 20

23 14. Financial instruments continued Level 1 Level 2 Level 3 Total As at 30 June s Available-for-sale financial assets Financial assets at FVTPL Derivative financial assets Trading investments carried at fair value 10,769 10,769 10, ,844 10, ,403 Financial liabilities at FVTPL Contractual obligation to acquire securities 4,341 4,341 There were no transfers between Level 1, 2 and 3 during the period. Level 1 Level 2 Level 3 Total As at 31 December s Available-for-sale financial assets Financial assets at FVTPL Derivative financial assets Trading investments carried at fair value 12,604 12,604 12, ,706 12, ,265 Financial liabilities at FVTPL Contractual obligation to acquire securities 2,551 2,551 For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lower level input that is significant to the fair value measurement as a whole) at the end of the reporting period. There were no transfers between Level 1, 2 and 3 during the period. Reconciliation of recurring fair value measurements categorised within Level 3 of the fair value hierarchy Share Unlisted options and securities warrants Total Opening balance 1 January Impairment recognised in income statement (150) (9) (159) Unrealised gain recognised in statement of comprehensive income Closing balance 30 June

24 Notes to the condensed consolidated financial statements continued 14. Financial instruments continued Level 3 financial instruments consist of derivative financial assets and unlisted shares received in lieu of fees. The unlisted equity shares are carried as available-for-sale financial assets, classified as Level 3 within the fair value hierarchy. A number of valuation techniques have been used to provide a range of possible values for these shareholdings in accordance with the International Private Equity and Venture Capital ( IPEV ) valuation guidelines. The carrying values have been adjusted to values within these ranges. There have been no other factors brought to the Board s attention which would suggest that there has been a further impairment. The derivative financial assets are carried as financial assets at FVTPL classified as Level 3 within the fair value hierarchy and comprise equity options and warrants over listed securities. Impact of reasonably possible alternative assumptions The significant unobservable input used in the fair value measurement of Cenkos holdings of share options and warrants is the volatility measure. Significant increases / (decreases) in the volatility measure would result in a significantly higher / (lower) fair value measurement. A sensitivity analysis based on a 10% increase / decrease in the volatility measure used as an input in the valuation of the share options and warrants shows the impact of such a movement would be an increase / decrease of 0.01 million respectively of the profit shown in the income statement. A sensitivity analysis based on a 10% increase / decrease in the share prices used as an input in the valuation of the unlisted securities shows the impact of such a movement would be an increase / decrease of 0.04 million respectively of the statement of comprehensive income. Determination of fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments measured at fair value on an ongoing basis include trading assets and liabilities and financial investments classified as available-for-sale. Fair values are determined according to the following hierarchy: (a) Level 1 Quoted market price Financial instruments with quoted prices for identical instruments in active markets. (b) Level 2 Valuation technique using observable inputs Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable. 22

25 14. Financial instruments continued (c) Level 3 Valuation technique with significant non-observable inputs Financial instruments valued using models where one or more significant inputs are not observable. The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial instrument is not active, a valuation technique is used. The majority of valuation techniques employ only observable market data and so the reliability of the fair value measurement is high. However, certain financial instruments are valued on the basis of valuation techniques that feature one or more significant market inputs that are nonobservable. For these instruments, the fair value derived is more judgemental. Not observable in this context means that there are few or no current market data available from which to determine the level at which an arm s length transaction would be likely to occur. It generally does not mean that there is absolutely no market data available upon which to base a determination of fair value (historical data may, for example, be used). Furthermore, the assessment of hierarchy level is based on the lowest level of input that is significant to the fair value of the financial instrument. The valuation models used where quoted market prices are not available incorporate certain assumptions that the Group anticipates would be used by a third party market participant to establish fair value. Fair value at 30 June s Valuation Technique Unobservable input Range Share options and warrants 93 Monte Carlo simulation Volatility % Unlisted securities 447 IPEV valuation guidelines Price of recent * transactions 540 * A meaningful range cannot be provided as there are a number of unlisted securities included within available-for-sale financial instruments. 15. Related party transactions Transactions with related parties are made at arm s length. Transactions or balances between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and, in accordance with IAS 24, are not disclosed in this note. The Board includes all employees considered to be key management personnel. 30 June 30 June 31 December Amounts owed by related parties Cenkos Securities Employee Benefit Trust ( CSEBT ) 3,279 3,203 3,192 Cenkos Securities Asia Pte. Ltd Cenkos Nominee UK Limited

26 Notes to the condensed consolidated financial statements continued 15. Related party transactions continued The compensation of the key management personnel of the Group (including the Directors) and their interests in the shares and options over the shares of Cenkos Securities plc were as follows: Six months Six months ended ended Year ended 30 June 30 June 31 December Aggregate emoluments 543 3,764 6,931 During 2014, in order to comply with the Pensions Act, Cenkos was required to enrol all qualifying employees in a pension scheme. Under the scheme, qualifying employees are required to contribute a percentage of their relevant earnings. The Company also contributes 1% of relevant earnings. During the period to 30 June 2016, Cenkos made payments totalling 91 (30 June 2015: 182, 31 December 2015: 366) in respect of one Director who is a member of this scheme. Related party interests in ordinary shares of Cenkos Securities plc 30 June 30 June 31 December No. No. No. Number of shares 14,865,194 13,351,413 14,669,737 Percentage interest 26% 22% 26% The related party interests in ordinary shares of Cenkos Securities plc include the following interest held in the SIP scheme: Number of shares held subject to forefeiture conditions Number of shares held 30 June 30 June 31 December 30 June 30 June 31 December No. No. No. No. No. No. Related party interests in SIP 50,688 19,440 19,440 68,875 26,286 27,156 Related party interests in share options Earliest Latest 30 June 30 June 31 December Grant exercise exercise date date date No. No. No. LTIP (Exercise price 1.00) 02/04/ /04/ /10/2015 1,000,000 CAP (Exercise price 1.69) 01/10/ /10/ /09/ , , ,710 SAYE Scheme (Exercise price 1.73) 15/07/ /08/ /02/ ,080 52,080 52,080 24

27 16. Events after the reporting period On 9 August 2016 the Company announced that it had entered into a full and final settlement with the FCA, which included a financial penalty of 530,500. This was the result of an FCA investigation into the Company s role as sponsor to Quindell plc ( Quindell ) (now known as Watchstone Group plc) in relation to Quindell s planned move from AIM to the premium segment of the main market of the LSE in June 2014 and into the Company s systems and controls in relation to its provision of sponsor services. This fine has been accrued for in full prior to the period end date. There has also been a significant amount of associated remediation and investigation costs which have been expensed as incurred in current and prior years. These costs have been included within administrative expenses in our condensed consolidated income statement. Since 2014, the Company has developed and implemented an extensive remediation programme to enhance and improve its systems and controls in relation to its sponsor services, including steps taken in consultation with the UK Listing Authority (UKLA). The FCA has acknowledged the extensive remediation programme which the Company has undertaken in order to enhance and improve its systems and controls in relation to its sponsor services. This continued investment in the business has ensured we now have more robust systems and controls in this and related areas. Whilst the Company remains in active dialogue with its insurers over the issue, as the Company has yet to receive any insurance recoveries associated with the costs of the investigation, no recoveries have been accrued at this stage pending confirmation from the insurers of the final amounts due. Aside from this, there were no material events to report on that occurred between 30 June 2016 and the date at which the Directors signed this Interim Report. 17. Contingent liabilities From time to time the Group may become subject to various litigation, regulatory or employment related claims. The Directors have considered any current matters pending against the Group and, based on the evidence, concluded that the outcome of these will be resolved with no material impact on the Group s financial position or results of operations. 25

28 Independent review report to Cenkos Securities plc Introduction We have been engaged by the Company to review the condensed set of consolidated financial statements in the halfyearly financial report for the six months ended 30 June 2016 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated cash flow statement, the condensed consolidated statement of changes in equity and the related explanatory notes to the condensed consolidated financial statements We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements. This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the European Union. As disclosed in note 1, the annual consolidated financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union. Ernst & Young LLP Registered Auditors London 21 September

29 Information for shareholders Directors Gerry Aherne (Non-executive Chairman) Mike Chilton (Finance Director) Jim Durkin (Chief Executive Officer) Jeff Hewitt (Non-executive Director) Paul Hodges (Executive Director) Dr. Anthony Hotson (Non-executive Director) Joe Nally (Executive Director) Nick Wells (Executive Director) Jeremy Warner Allen (Executive Director) Company Secretary Stephen Doherty Financial Calendar March Year-end results announced May Annual General Meeting and final dividend paid September Half-year results announced November Interim dividend paid Company Registration Number and Country of Incorporation Registered Office Banker Solicitors , England & Wales Tokenhouse Yard London EC2R 7AS HSBC Corporate Banking 60 Queen Victoria Street London EC4N 4TR Ashurst LLP Broadwalk House 5 Appold Street London EC2A 2HA Travers Smith LLP 10 Snow Hill London EC1A 2AL Auditors Registrars Nominated Adviser and Broker Website Ernst & Young LLP 25 Churchill Place London E14 5EY Capita Asset Services The Registry 34 Beckenham Road Kent BR3 4TU Smith and Williamson Corporate Finance Limited 25 Moorgate London EC2R 6AY 27

30 Printed by Rubicon Corporate Print

31 Cenkos Securities plc London Tokenhouse Yard London EC2R 7AS Telephone: Fax: Edinburgh 3rd Floor 66 Hanover Street Edinburgh EH2 1EL Telephone: Fax: Liverpool Mezzanine Level Exchange Station Tithebarn Street Liverpool L2 2QP Telephone: Cenkos Securities Asia Pte Limited Singapore 137 Market Street #13-02 Singapore Telephone: