Final Results, Posting of Report and Notice of AGM

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

		2020	2019
			(Restated)
		£'000	£'000	Reported
Total Revenue		5,383	4,589	+17%
Loss on ordinary activities before taxation		(127)	(381)
Loss per ordinary share		(1.1p)	(3.3p)

 

 

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

London

EC2M 5QS

Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Samantha 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 [email protected] 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

	Notes	2020	2019
		£'000	£'000 (restated)
Continuing Operations
Fee and commission income		5,347	4,591
Other income / (loss)		36	(1)
Profit / (loss) on investments sold		-	(1)
Total Revenue	2	5,383	4,589
Operating expenses		(5,743)	(5,020)
Operating (loss)		(360)	(431)
Investment revenue		143	-
Finance income		148	108
Finance costs		(58)	(58)
Loss on ordinary activities before taxation		(127)	(381)
Taxation	3	-	-
Loss on ordinary activities after taxation		(127)	(381)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Movement in unrealised appreciation of investments		(793)	3,289
Deferred tax on movement in unrealised appreciation of investments		187	(583)
Net other comprehensive income		(606)	2,706
Total comprehensive income attributable to equity shareholders		(733)	2,325
Loss per ordinary share
Basic	4	(1.1p)	(3.3p)
Diluted	4	(1.1p)	(3.3p)

 

All results are from continuing operations.

 

Consolidated Statement of Financial Position

31 May 2020

 

	Notes	As at 31 May 2020	As at 31 May 2019	As at 1 June 2018
		£'000	£'000 (restated)	£'000 (restated)
Non-current Assets
Intangible assets	5	1,289	1,445	1,576
Other intangible assets	6	65	97	130
Right-of-use assets	7	101	-	-
Property, plant and equipment	8	53	30	35
Investments held at Fair Value Through Other Comprehensive Income	9	4,962	5,759	2,470
Total non-current assets		6,470	7,331	4,211
Current Assets
Trade and other receivables	10	2,398	2,387	4,183
Cash and cash equivalents		2,239	2,073	2,453
Total current assets		4,637	4,460	6,636
Current liabilities
Trade and other payables	11	2,924	2,814	4,790
Short-term lease liabilities	12	124	-	-
Current tax liabilities		-	-	36
Total current liabilities		3,048	2,814	4,826
Net current assets		1,589	1,646	1,810
Non-current liabilities
Deferred tax liabilities	13	611	797	214
Total non-current liabilities		611	797	214
Net Assets		7,448	8,180	5,807
Equity
Share capital	14	2,923	2,904	2,890
Share premium		2,057	2,029	1,997
Revaluation reserve		3,597	4,203	1,497
Retained losses		(1,129)	(956)	(577)
Shareholders' equity		7,448	8,180	5,807

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

 

	Share capital	Share premium	Revaluation reserve	Retained losses	Total
	£'000	£'000	£'000	£'000	£'000
Balance at 1 June 2018 as reported	2,890	1,997	1,497	(848)	5,536
Adjustments	-	-	-	271	271
As restated at 1 June 2018	2,890	1,997	1,497	(577)	5,807
Loss for the financial year as restated	-	-	-	(381)	(381)
Movement in unrealised appreciation of investments	-	-	3,289	-	3,289
Deferred tax on movement in unrealised appreciation of investments	-	-	(583)	-	(583)
Total comprehensive income / (expense) for the year	-	-	2,706	(381)	2,325
Share based payment transactions	-	-	-	2	2
Issue of ordinary share capital	14	32	-	-	46
Total transactions with owners, recognised directly in equity	14	32	-	2	48
Balance at 31 May 2019	2,904	2,029	4,203	(956)	8,180
Adoption of IFRS 16	-	-	-	(48)	(48)
Balance at 1 June 2019	2,904	2,029	4,203	(1,004)	8,132
Loss for the financial year	-	-	-	(127)	(127)
Movement in unrealised appreciation of investments	-	-	(793)	-	(793)
Deferred tax on movement in unrealised appreciation of investments	-	-	187	-	187
Total comprehensive income / (expense) for the year	-	-	(606)	(127)	(733)
Share based payment transactions	-	-	-	2	2
Issue of ordinary share capital	19	28	-	-	47
Total transactions with owners, recognised directly in equity	19	28	-	2	49
Balance at 31 May 2020	2,923	2,057	3,597	(1,129)	7,448

 

 

 

Group and Parent Company Statement of Cash Flows

For the year ended 31 May 2020 

 

	Notes	2020	2020	2019	2019
		Group	Company	Group	Company
		£'000	£'000	£'000 (restated)	£'000 (restated)
Operating (loss)		(360)	(170)	(431)	(284)
Amortisation of intangible assets arising on consolidation		156	24	131	-
Amortisation of other intangible assets		32	32	33	33
Depreciation of right-of-use assets		173	173	-	-
Depreciation of property, plant and equipment		39	39	22	22
Expenses settled by the issue of shares		2	2	2	2
(Increase) / decrease in receivables		(11)	323	1,796	1,454
Increase / (decrease) in payables		75	24	(2,034)	(2,010)
Cash generated from/(used) in operations		106	447	(481)	(783)
Tax (paid)		-	-	(36)	-
Net cash generated from/(used in) operating activities		106	447	(517)	(783)
Investing activities
Investment income received		143	143	-	-
Interest received		148	148	108	107
Proceeds on disposal of investments held at FVTOCI		5	5	-	-
Purchases of property, plant and equipment		(62)	(62)	(17)	(17)
Net cash generated from investing activities		234	234	91	90
Financing activities
Interest paid		(24)	(24)	-	-
Proceeds from issue of ordinary share capital		47	47	46	46
Repayment of lease liabilities		(197)	(197)	-	-
Net cash (used in)/generated from financing activities		(174)	(174)	46	46
Net increase/(decrease) in cash and cash equivalents		166	507	(380)	(647)
Cash and cash equivalents at beginning of year		2,073	1,391	2,453	2,038
Cash and cash equivalents at end of year		2,239	1,898	2,073	1,391