Final Results

RNS Number : 7606C

Cenkos Securities PLC

11 March 2011

Cenkos Securities plc (the "Company") together with its subsidiaries (the "Group")

ANNUAL FINANCIAL RESULTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2010

Cenkos Securities plc today announced its audited final results for the year to 31 December 2010. The highlights of the results comparing them with the prior year are:

Financial highlights

· Revenues up by 31% to £60.3 million (2009: £46.2 million).

· Underlying operating profit up by 10% to £14.4 million (2009: £13.0 million).

· Statutory operating profit up by 25% to £7.0 million (2009: £5.6 million).

· Underlying profit before tax up by 5% to £14.5 million (2009: £13.8 million).

· Statutory profit before tax down by 5% to £7.1 million (2009: £7.5 million).

· Underlying basic earnings per share 13.2p (2009: 13.8p).

· Underlying diluted earnings per share 13.1p (2009: 13.8p).

· Statutory basic and diluted earnings per share 5.2p (2009: 6.2p).

· The Board proposes a final dividend of 4p per share (2009: 5p). This makes a total dividend of 8p for the year (2009: 20p). This year's dividend represents current year performance, whereas last year's total dividend was made up of 10p per share reflecting the underlying performance of the Group in 2009 and a further 10p per share which was paid from profits generated in previous periods.

· Strong cash levels (including £5m held on trust for creditors) at £28.5 million (2009: £20.0 million) and capital resources surplus (including £5m held on trust for creditors) of £7.7 million (2009: £6.4 million) in excess of our Pillar 1 and 2 regulatory capital requirements.

Business highlights

· Ranked number one NOMAD, in respect of client market capitalisation, by Hemscott in January 2011 reflecting continued success in attracting new institutional and corporate clients helping to grow the Cenkos franchise.

· Continued success in raising funds for our clients even though conditions in equity capital markets remain unpredictable. In the year to 31 December 2010, we raised a total of £1.44 billion (2009: £0.95 billion).

· In April 2010, Cenkos, as sole book runner and listing sponsor, raised £460 million for the Anthony Bolton-managed Fidelity China Special Situations plc. In February 2011, we raised a further £166 million for this Fund.

· Strong growth in Fund and Wealth Management business with funds under management increasing 41% to £1.10 billion (2009: £0.78 billion) reflecting increasing diversification of revenue within the Group.

· Continuing investment in high quality personnel with the expectation of increasing the Group's level of recurring income.

· Since the period end a further £292 million has been raised for clients from 5 transactions.

For further information contact:

Simon Melling

Chief Executive Officer

Cenkos Securities plc 020 7397 8900

David Rydell

Pelham Bell Pottinger 020 7861 3886

Business and financial review

Overview

During the year, Cenkos Securities plc ("Cenkos" or the "Company") and its subsidiaries (together the "Group") increased both its revenue and underlying profits. This has been achieved against a backdrop of challenging equity markets throughout the year, caused in part by uncertainty surrounding the change of government, the various European sovereign debt crises and the potential effects of Government austerity measures. Our robust business model combined with the high quality, dedication and experience of our employees have enabled us to continue this market-leading performance.

In these uncertain markets the Group has continued to raise substantial capital for its corporate clients, with the result that we are now one of the leading brokers in London for growth companies. In January 2011, Cenkos was ranked first in terms of the aggregate market capitalisation of its clients and was also ranked first for the number of clients within the Oil and Gas sector as per Hemscott's AIM Advisers Rankings Guide.

Total revenue for the year increased by 31% to £60.3 million (2009: £46.2 million), which, we believe, is a solid performance given the economic climate. This puts the Group in a strong position to continue its organic growth by adding high quality individuals to our existing teams as well as recruiting new teams with complementary income streams and who are seeking the entrepreneurial ethos of Cenkos.

One of the Group's goals is to increase the spread of revenues both across different teams and activities and to increase the proportion of total revenues made up by recurring revenues. Significant progress in this direction has been achieved over the period, with a more even spread among departments, and increases in retained clients and revenues from Fund Management.

The table below shows a breakdown of revenue by segment.

	2010	2009
	£ 000's	£ 000's
Corporate broking and advisory	46,733	35,583
Institutional equities	4,955	4,706
Fund and wealth management	8,619	5,915
	60,307	46,204

Corporate broking and advisory

This business segment includes the results of our small/mid cap, investment funds and credit market activities, including the results of our market making capability carried on to support these areas. Revenue by segment is made up of placing commission on fund raisings, corporate finance fees and retainer income, market making profits and commissions on secondary market transactions. Revenue was up 31% to £46.7 million (2009: £35.6 million) and the segment result before unallocated administrative expenses was up 7% to £18.9 million (2009: £17.7 million) as set out in note 3 to the financial statements.

During the year, we completed 30 transactions (excluding investment funds) raising a total of £833 million (2009: £551 million), which included 8 primary issues. As at 31 December 2010, the Group was nominated adviser or corporate broker/financial adviser to 104 companies or trusts (2009: 105) with a market capitalisation of £18.6 billion (2009: £13.4 billion). In the period we also completed 17 M&A corporate finance transactions (2009: 19). This performance is particularly encouraging as it was achieved during a period where there has been limited transactional revenue.

Our investment funds team provides a broad range of services to investment companies including primary and secondary sales, market making, research, corporate broking and corporate finance advice. Its sales team services both institutional and wealth management clients. In April 2010, Cenkos, as sole book runner and listing sponsor, raised £460 million for the Anthony Bolton-managed Fidelity China Special Situations plc, bringing the total raised for investment funds in the year to 31 December 2010 to £609 million (2009: £400 million). In February 2011 the team raised a further £166 million for Fidelity China Special Situations plc.

The Group makes markets in the securities of all the companies where it has a broking relationship to support the other services it provides to its clients. We continue to actively restrict the amount of the Group's capital committed to this activity to limit our market risk exposure without adversely affecting the revenue generated. The Group does not engage in proprietary trading and applies position limits and monitoring procedures to ensure it controls any risks taken. The Group does from time to time take stock in lieu of fees and the market movement on these items is also included in this income stream. In December 2010 the decision was taken to close the Credit Markets division as it had been loss making for most of the year. The environment within which the division operated changed significantly during the course of 2010. Most business was being transacted directly between principals and as an agency business we were not prepared to use our balance sheet to support this activity.

Institutional Equities

The Institutional Equities team based in London provides research-driven investment recommendations to institutional clients. While many of our clients continue to pay for our research services directly, more are choosing to transact business through Cenkos as well. The demise of the trading capacity of the larger investment houses has levelled the playing field for other firms. In the same way that Cenkos specialises in researching certain areas of the market, we now specialise in facilitating business in these same areas.

We continue to strengthen the research team and now provide research in food, retail, technology and building/construction. Cenkos is actively pursuing the recruitment of leading analysts covering other sectors, although the significant upfront guarantees offered by many larger banks have increased competition and hindered recruitment. Cenkos will not change its business model, but will seek to attract individuals who embrace our performance-driven culture and who can assist in bringing us capital markets transactions. Group revenue, in this segment, increased by 5% to £5.0 million (2009: £4.7 million). The segment result before unallocated administrative expenses is down by 31% to £1.5 million (2009: £2.2 million). This reduction in profits reflects the fact that we have continued to invest in this area through the economic downturn. We believe that this investment will be repaid when volumes and more benign conditions return.

Our execution business within this segment is strictly focused on client facilitation. We do not engage in proprietary trading. We believe that the continued organic growth of this area will enhance Cenkos' overall service to its expanding client base. It is also important to point out that the team's income also increases the proportion of recurring revenue coming into the Group.

Fund and Wealth Management

Our offshore fund and wealth management services are provided through Cenkos Channel Islands Limited, a 50% owned subsidiary based in Guernsey and its own subsidiary based in Jersey. Varying levels of stock broking services are offered, from fully discretionary to execution only, to high net worth individuals, financial intermediaries and institutions. The offshore asset management business has continued to grow and has made a positive contribution to the Group's results, with 2,197 clients (2009: 1,669) and £1.10 billion funds under management (2009: £0.78 billion).

The onshore fund management business is provided by Cenkos Fund Managers Limited, a subsidiary 70% owned by Cenkos Fund Management Limited, which is a 65% owned subsidiary of Cenkos Securities plc. This operation has an investment management agreement with an AIM-quoted fund. The fund has been put into run off and although investment management fees will continue to be generated we expect it to make only a minimal contribution to the Group.

Segment revenue has increased by 46% to £8.6 million (2009: £5.9 million) and principally due to the operational gearing in these activities the segment result before unallocated administrative expenses has increased by 49% to £2.0 million (2009: £1.4 million). This has helped Cenkos to diversify its revenue base, complementing its continued strong performance in corporate broking and advisory division.

Income statement

Total group revenue was £60.3 million compared to £46.2 million last year, an increase of 31%.

Underlying operating profit increased by 10% to £14.4 million from £13.0 million. Underlying operating profit is analysed in the table below and excludes the effects of capital restructuring resulting from the paying up of partly paid shares and granting of options which took place in July 2009, dividend bonus payments to holders of share options, re-organisation of the Edinburgh office, redundancy costs associated with the closure of the Credit Markets operation, aborted acquisition costs and the net cost of settlement of litigation with a sub-broker previously disclosed as a contingent liability. These adjusting items amount to £7.4 million (2009: £7.4 million). This re-analysis allows an insight into the underlying performance of the Group.

	2010			2009
	Underlying income statement	Adjusting items	Statutory income statement	Underlying income statement	Adjusting items	Statutory income statement
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Revenue	60,307	-	60,307	46,204	-	46,204
Adjusted administrative expenses	(45,935)	-	(45,935)	(33,190)	-	(33,190)
Re-organisation of Edinburgh office	-	(2,165)	(2,165)	-	-	-
Redundancy costs: closure of Credit Markets operation	-	(206)	(206)	-	-	-
Bonus resulting from the Compensatory Award Phantom Dividend Plan 2009	-	(2,135)	(2,135)	-	(2,426)	(2,426)
Aborted acquisition costs	-	(1,285)	(1,285)	-	-	-
Net cost of settlement of litigation with sub-broker	-	(1,598)	(1,598)	-	-	-
Fair value of options awarded under Compensatory Award Plan 2009	-	-	-	-	(4,455)	(4,455)
Extension of the repayment terms of loans to B shareholders	-	-	-	-	(532)	(532)
Operating profit	14,372	(7,389)	6,983	13,014	(7,413)	5,601
Acceleration of the discount due to early repayment of loans to B shareholders	-	-	-	-	1,139	1,139
Investment income - interest receivable	454	-	454	764	-	764
Finance costs - interest payable	(1)	-	(1)	(258)	-	(258)
(Loss)/gain on sale of available-for-sale financial asset	(294)	-	(294)	254	-	254
Profit before tax	14,531	(7,389)	7,142	13,774	(6,274)	7,500
Tax	(4,071)	1,753	(2,318)	(3,232)	763	(2,469)
Profit for the period	10,460	(5,636)	4,824	10,542	(5,511)	5,031
Attributable to:
Equity holders of the parent	9,362	(5,636)	3,726	10,005	(5,511)	4,494
Minority interests	1,098	-	1,098	537	-	537
	10,460	(5,636)	4,824	10,542	(5,511)	5,031
Earnings per share
Basic	13.2 p		5.2 p	13.8 p		6.2p
Diluted	13.1 p		5.2 p	13.8 p		6.2p

The reduction in underlying operating margins to 24% from 28% reflects a number of factors, namely the continued investment in building our teams as the business matures, as shown by the increase in average head count, and a change in the mix in revenue by team. In the year lower margin teams, such as Institutional Equities and Fund and Wealth Management, have performed well in revenue terms. In addition, whilst retaining the direct link to performance, we have increased bonus rates from a third of revenues after direct cost to 40%. This is consistent with other financial sector companies in our peer group and enables us to remain competitive. Cenkos endeavours to remunerate its staff to a level which not only retains but also motivates them to behave in line with the longer-term growth objectives of the Company. Cenkos continues to pursue a policy of maintaining a low fixed cost base and a remuneration policy of low basic salaries and rewarding net income generation.

Statutory operating profit increased by 25% to £7.0 million (2009: £5.6 million). This, in addition to the items explained above, includes charges for bonuses under the Compensatory Award Phantom Dividend Plan 2009 and a provision for a cash-settled shadow equity scheme, set up in 2009 for our team based in Edinburgh. Also, as previously disclosed in 2009 as a contingent liability, a sub-broker instigated proceedings for payment of commission he claimed was due for assisting the Company in introducing investors to an investee company. The Company defended the claim and the case went to trial in the High Court in February 2010, with judgment handed down in March 2010. The judge dismissed the claim. The claimant was subsequently granted leave to appeal and the appeal hearing took place at the Court of Appeal in November 2010. As disclosed previously, the appeal was upheld and we decided not to appeal the Court's decision. The net settlement amount shown above is after the deduction of employee bonuses. In addition, during the year we unfortunately had to abort a major acquisition.

Statutory profit before tax is down by 5% to £7.1 million (2009: £7.5 million). This decrease is due to the effects mentioned above as well as the fact that as a result of the paying up of unpaid shares there was no unwinding of the discount whereas during the comparative period there was a credit of £1.1 million, which was a non-cash item.

The tax charge for the year is £2.3 million (2009: £2.5 million), which equates to an effective rate of tax of 32% (2009: 33%).

The underlying basic earnings per share for the year is 13.2p (2009: 13.8p), whilst the underlying diluted earnings per share is 13.1p (2009: 13.8p). The statutory basic and diluted earnings per share for the year is 5.2p (2009: 6.2p).

Balance sheet and cash flow

As mentioned above, we continue to closely manage the amount of capital committed to our market making activities and consequently have net trading investments of £7.5 million (2009: £6.1 million). In addition, during the year we sold our available-for-sale investment in Plus Markets Group plc realising a loss of £0.29 million.

We currently hold very healthy cash levels (including £5million held in trust for creditors) at £28.5 million (2009: £20.0 million). The year to 31 December 2010 saw an inflow of cash from operating activities of £14.8 million against an inflow of £28.1 million in 2009. The prior year included £10.5 million inflow resulting from employees paying up premium on 10.6 million partly paid B shares.

The Company and its subsidiaries are able to continue as going concerns while maximising the return to stakeholders. At present the Group has no gearing and the Board continues to review gearing levels on an ongoing basis. The Group has to retain sufficient capital to satisfy the UK Financial Services Authority's capital requirements. These requirements vary from time to time depending on the business conducted by the Group. As at 31 December 2010, the Group had a solvency ratio based on capital resources against Pillar 1 capital requirement of 212% (2009: 204%) based on audited profits and a capital resources surplus of £7.7 million (2009: £6.4 million) in excess of our Pillar 1 and 2 regulatory capital requirements.

Dividend

As we have consistently stated, we only intend to retain sufficient capital and reserves to meet the Group's regulatory capital and cash requirements, after taking account of the likely future working capital requirements of the Group. The 2009 reorganisation of the B share employee incentive scheme resulted in an increase in cash and regulatory capital from the payment of unpaid share premium by employees, to a level in excess of requirements. The major constraining factor in pursuing the dividend policy has been the Company's distributable reserves.

The Company obtained shareholder and Court approval for the cancellation of its share premium account on 1 November 2010 and 17 November 2010 respectively. This reduction created a further £22.7 million of distributable reserves.

The Board proposes a final dividend of 4p per share (2009: 5p). This makes a total dividend of 8p for the year (2009: 20p). This year's dividend represents current year performance, whereas last year's total dividend was made up of 10p per share reflecting the underlying performance of the Group in 2009 and a further 10p per share which was paid from profits generated in previous periods.

Subject to approval at the Annual General Meeting to be held on 14 April 2011, the final dividend will be paid on 28 April 2011 to all shareholders on the register at 25 March 2011.

People

Whilst the market in which we operate remains unsettled, the continued professionalism of our employees has enabled us to continue our strong performance. I am proud to lead a group of such dedicated and talented individuals. Their skill, commitment and determination will continue to provide us with a solid platform on which to build our franchise.

During the year there were a number of changes to the Board. John Hodson stepped down as Chairman at the AGM and Peter Sullivan agreed to take on John's role. Andy Stewart also decided to step down from the Board on 20 July 2010. Paul Roy stepped down from the Board on 30 September 2010. Once again I would like to express my thanks to John, Paul and Andy for their contribution to Cenkos. We previously announced that David Henderson and Oliver Ellingham have joined the Board as Non-executive Directors and I am sure their experience and knowledge will be invaluable to the Group in the next stage of our growth.

Principal risks and controls

As you would expect the fundamental risk to the Group is the health of the financial markets and in particular the economic conditions of the UK. Notwithstanding this risk the remaining principal risks and uncertainties currently faced by the Group are outlined below. The risks outlined are those that the Group believes have the potential to have a significant detrimental impact on its financial performance and future prospects. These risks should not be regarded as a comprehensive list of all the risk and uncertainties the Group may potentially face, which could adversely impact its performance.

Reputational and litigation risk

The Group believes that one of the greatest risks to the Group comes from the potential loss of its reputation. Whilst entrepreneurial employees are encouraged to develop new clients and streams of revenue, all new business is subject to a rigorous appraisal process from the New Business Committee to ensure that it meets the Group's strict criteria. The Group also aims to demonstrate the highest level of integrity in all of its activities and the Executive Management Committee as well as Group Compliance instil awareness in all employees of the need to display the highest ethical standards and confidentiality in all the work that they undertake for the Group.

There is always a risk that some form of litigious action may be taken against the Group. Before any decision to enter into litigation is made the Board, the senior management and the Group's legal advisers will review all aspects of the case to assess and consider if it is in the best interests of the Group and ultimately the shareholders to either instigate proceedings or defend itself against litigation.

Regulatory risk

The Group's principal subsidiaries are regulated entities. The Board's policy is to promote a strong culture of regulatory and legal compliance throughout the Group. Strong relations are maintained with the Group's regulators and the Group engages in dialogue with the regulators on a regular basis. During the year a number of reviews were undertaken specifically focusing on reinforcing conflict management and "Chinese Wall' procedures and policies within the Group.

Business processes and operational risk

Business processes and operational risk is the risk that the Group suffers a loss directly or indirectly from inadequate or failed internal processes, people and systems or from external events. To mitigate this risk the Group has adopted a formal approach to operational risk event reporting, which involves the identification of an event, assessment of its materiality, analysis of the cause, the establishment of remedial action required and escalation to me as Chief Executive Officer, and to the Group Risk and Compliance Committee.

During this process Group Compliance and senior management closely ensure that this process is followed and that any significant operational risks and their controls are continually reviewed, tested and assessed and where applicable corrective action plans are put in place. There is also an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. As part of general corporate governance requirements Cenkos has a framework covering all aspects of the firms' risks. Cenkos's senior management review and evaluate the business processes and associated risks within each area of the firm's business, identifying and assessing the mitigating controls and procedures in place and the action plan to address any weaknesses in control.

The Group continuously reviews its business continuity planning, and has disaster recovery facilities in place in order to mitigate any substantial disruption to its operations. In February 2011 the Company's annual Business Continuity Plan was tested. No issues of concern were raised in respect of this test.

People risk

The Group's employees are its greatest asset and the future success of the Group depends on the Group's ability to attract and retain high quality employees. Failure to recruit or retain such employees could significantly affect the performance of the Group. The Group seeks to minimise this risk by rewarding employees through an overall remuneration package that is geared towards performance and share-based payments that align the interests of the employees and shareholders.

Market risk

The Group is exposed to market risk arising from its short-term positions in predominantly market making stocks. To mitigate this risk the Group manages market risk by establishing individual stock limits and overall trading book limits. There are daily procedures in place to monitor the utilisation of these limits. These limits are reviewed on a continuous basis by me as Chief Executive Officer and also by the Group Risk and Compliance Committee.

Prudential and liquidity risks

Cenkos continues to focus heavily on prudential risks to ensure the appropriate systems and controls and reporting requirements are in place to meet the obligations of a BIPRU Investment firm.

The Group is also exposed to liquidity risk being the risk that the Group is unable to fund its commitments as and when they arise. To mitigate this risk the Group has in place an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The liquidity risk management framework was approved by the Board during the year. The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Given the nature of the Group's business, the Group does not run any significant liquidity mismatches, financial liabilities are on the whole short-term and the Group has sufficient liquid assets to cover all these liabilities.

Outlook

We remain cautious regarding the general economy for the rest of the year. Confidence levels are still delicate, fuelled by concerns about the Middle East, the strength of the global economy and the potential for a second recession in the UK. There are signs that the speed of recovery has slowed, with the economy contracting in the fourth quarter of 2010, in addition to jobs growth weakening and a widening trade deficit. We also believe that there is an underestimate of the effect of dealing with the UK public deficit.

Whilst not immune to events in the general economy, our pipeline remains strong and we have made an encouraging start to 2011.

Since 31 December 2010, we have undertaken a number of corporate and issuance transactions and raised over £292 million for our clients.

Simon Melling

Chief Executive Officer

11 March 2011

Responsibility Statement

We confirm that to the best of our knowledge:

a) the 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

b) the 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 they face.

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.

Consolidated income statement for the year ended 31 December 2010
		1 January	1 January 2009 to 31 December 2009
		2010 to	Before non	Non	After non
		31 December	recurring	recurring	recurring
		2010	item	item (note 8)	item
	Notes	£ 000's	£ 000's	£ 000's	£ 000's
Revenue	3	60,307	46,204	-	46,204
Administrative expenses		(53,324)	(35,616)	(4,987)	(40,603)
Operating profit/(loss)		6,983	10,588	(4,987)	5,601
Investment income - interest receivable	4	454	764	1,139	1,903
(Loss)/gain on sale of available-for-sale financial asset		(294)	254	-	254
Finance costs - interest payable	5	(1)	(258)	-	(258)
Profit/(loss) before tax	7	7,142	11,348	(3,848)	7,500
Tax	9	(2,318)	(2,553)	84	(2,469)
Profit/(loss) for the year		4,824	8,795	(3,764)	5,031
Attributable to:
Equity holders of the parent		3,726	8,258	(3,764)	4,494
Minority interests		1,098	537	-	537
		4,824	8,795	(3,764)	5,031
Earnings per share
From continuing operations
Basic	11	5.24p	11.40p		6.20p
Diluted	11	5.21p	11.36p		6.18p

All amounts shown in the consolidated financial statement derive from continuing operations of the Group.
The profit attributable to the Company in the year ended 31 December 2010 was £3,382,141 (31 December 2009: £3,671,410).

Consolidated statement of comprehensive income for the year ended 31 December 2010
		1 January	1 January 2009 to 31 December 2009
		2010 to	Before non	Non	After non
		31 December	recurring	recurring	recurring
		2010	item	item	item
		£ 000's	£ 000's	£ 000's	£ 000's
Profit/(loss) for the year		4,824	8,795	(3,764)	5,031
Available-for-sale financial assets:
Gains arising during the period		48	195	-	195
Other comprehensive income for the year		48	195	-	195
Total comprehensive income for the year		4,872	8,990	(3,764)	5,226
Attributable to:
Equity holders of the parent		3,774	8,453	(3,764)	4,689
Minority interests		1,098	537	-	537
		4,872	8,990	(3,764)	5,226

Consolidated balance sheet as at 31 December 2010
				31 December	31 December
				2010	2009
				£ 000's	£ 000's
Non-current assets
Property, plant and equipment				931	872
Available-for-sale investments				-	511
Deferred tax assets				123	227
				1,054	1,610
Current assets
Investments - long positions				10,962	8,153
Trade and other receivables				31,590	36,357
Cash and cash equivalents				28,468	19,994
				71,020	64,504
Total assets				72,074	66,114
Current liabilities
Investments - short positions				(3,481)	(2,058)
Trade and other payables				(41,338)	(35,251)
				(44,819)	(37,309)
Net current assets				26,201	27,195
Net assets				27,255	28,805
Equity
Share capital				728	727
Share premium account				-	22,700
Own shares				(2,147)	(2,037)
Available-for-sale reserves				-	(48)
Retained earnings				27,134	6,626
Equity attributable to equity holders of the parent				25,715	27,968
Minority interests				1,540	837
Total equity				27,255	28,805

The financial statements were approved by the Board of Directors and authorised for issue on 11 March 2010. They were signed on its behalf by:

Peter Sullivan		Simon Melling
Chairman		Chief Executive Officer
Registered Number: 05210733

Consolidated cash flow statement for the year ended 31 December 2010

				1 January	1 January
				2010 to	2009 to
				31 December	31 December
				2010	2009
				£ 000's	£ 000's

Profit for the year				4,824	5,031
Adjustments for:
Finance income				(453)	(1,645)
Loss /(gain) on sale of available-for-sale financial asset				294	(254)
Tax expense				2,318	2,470
Depreciation of property, plant and equipment				346	327
Shares and options received in kind				1,143	362
Share-based payment expense				489	5,572
Operating cash flows before movements in working capital				8,961	11,863
(Increase) / decrease in net trading investments				(2,529)	2,429
Decrease in trade and other receivables				5,156	6,368
Increase in trade and other payables				6,425	11,565
Net cash flow from operating activities				18,013	32,225
Interest paid				(1)	(258)
Tax paid				(2,543)	(2,358)
Net cash flow from operating activities				15,469	29,609
Investing activities
Interest received				65	138
Net proceeds from the part disposal of a subsidiary				-	6
Purchase of property, plant and equipment				(405)	(88)
Proceeds from the sale of available-for-sale investments				265	701
Net cash (outflows) / inflows from investing activities				(75)	757
Financing activities
Dividends paid				(6,416)	(14,547)
Distributions made to minority interests				(395)	(125)
Acquisition of own shares				(110)	(2,037)
Proceeds from issue of share capital				1	-
Net cash used in financing activities				(6,920)	(16,709)
Net increase in cash and cash equivalents				8,474	13,657
Cash and cash equivalents at beginning of year				19,994	6,337
Cash and cash equivalents at end of year				28,468	19,994

Consolidated statement of changes in equity for the year ended 31 December 2010
	Equity attributable to equity holders of the parent
	Share capital	Share premium	Own Shares	Available for sale reserve	Retained earnings	Total	Minority Interests	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
At 1 January 2009	727	22,700	-	(243)	11,614	34,798	429	35,227
Profit for the year	-	-	-	-	4,494	4,494	-	4,494
Other comprehensive income for the year	-	-	-	195	-	195	-	195
Total comprehensive income for the year	-	-	-	195	4,494	4,689	-	4,689
Profit allocated to minority interests	-	-	-	-	-	-	537	537
Own shares acquired in the year	-	-	(2,037)	-	-	(2,037)	-	(2,037)
Interest acquired by minority interest	-	-	-	-	9	9	(4)	5
Credit to equity for equity-settled share-based payments	-	-	-	-	5,040	5,040	-	5,040
Deferred Tax on share-based payments	-	-	-	-	16	16	-	16
Dividends paid	-	-	-	-	(14,547)	(14,547)	(125)	(14,672)
At 31 December 2009	727	22,700	(2,037)	(48)	6,626	27,968	837	28,805
Profit for the year	-	-	-	-	3,726	3,726	-	3,726
Other comprehensive income for the year	-	-	-	48	-	48	-	48
Total comprehensive income for the year	-	-	-	48	3,726	3,774	-	3,774
Shares issued	1	-	-	-	-	1	-	1
Cancellation of share premium account	-	(22,700)	-	-	22,700	-	-	-
Profit allocated to minority interests	-	-	-	-	-	-	1,098	1,098
Own shares acquired in the year	-	-	(110)	-	-	(110)	-	(110)
Credit to equity for equity-settled share-based payments	-	-	-	-	489	489	-	489
Deferred Tax on share-based payments	-	-	-	-	9	9	-	9
Dividends paid	-	-	-	-	(6,416)	(6,416)	(395)	(6,811)
At 31 December 2010	728	-	(2,147)	-	27,134	25,715	1,540	27,255

Notes to the financial statements for the year ended 31 December 2010
1. Accounting policies
General information
Cenkos Securities plc is a company incorporated in the United Kingdom under the Companies Act 2006 (Company Registration No. 05210733). The Group's principal activity is the provision of investment banking services. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates.
Basis of accounting
The accounting policies used in arriving at the figures in this announcement are consistent with those which were set out in the audited financial statements for the year ended 31 December 2010. Whilst the financial information included in this announcement is based on the company's financial statements which are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRSs. The Group's 2010 Statutory Accounts comply with IFRSs'.
Adoption of new and revised standards
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.
Standards affecting the financial statements
IAS 27(2008) Consolidated and Separate Financial Statements; IAS 28(2008) Investments in Associates	These standards have introduced a number of changes in the accounting for business combinations when acquiring a subsidiary or an associate.
The following amendments were made as part of improvements to IFRSs (2009).
Amendment to IFRS 2 Share-based Payment	IFRS 2 has been amended, following the issue of IFRS 3(2008), to confirm that the contribution of a business on the formation of a joint venture and common control transactions are not within the scope of IFRS 2. This has no impact on the financial statements.
Amendment to IAS 17 Leases	IAS 17 has been amended such that it may be possible to classify a lease of land as a finance lease if it meets the criteria for that classification under IAS 17. The amendment has been applied retrospectively in accordance with the relevant transitions. This has no impact on the financial statements.
Amendment to IAS 39 Financial Instruments: Recognition and Measurement	IAS 39 has been amended to state that options contracts between an acquirer and a selling shareholder to buy or sell an acquiree that will result in a business combination at a future acquisition date are not excluded from the scope of the standard. This has no impact on the financial statements.
Standards not affecting the reported results nor the financial position
The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements.
IFRIC 17 Distributions of Non-cash Assets to Owners	The Interpretation provides guidance on when an entity should recognise a non-cash dividend payable, how to measure the dividend payable and how to account for any difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable when the payable is settled.
IFRS 2 (amended) Group Cash-settled Share-based Payment Transactions	The amendment clarifies the accounting for share-based payment transactions between group entities.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
IFRS 9 Financial Instruments IAS 24 (amended) Related Party Disclosures IAS 32 (amended) Classification of Rights Issues IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 14 (amended) Prepayments of a Minimum Funding Requirement Improvements to IFRSs (May 2010) The adoption of IFRS 9 which the Group plans to adopt for the year beginning on 1 January 2013 will impact both the measurement and disclosures of Financial Instruments. The Directors do not expect that the adoption of the other standards listed above will have a material impact on the financial statements of the Group in future periods.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Going concern
The Group's business activities, together with the factors likely to affect its future development and performance, the financial position of the Group, its cash flows and liquidity position are set out in the Business and Financial Review. The Directors have considered forecasts taking account of the current uncertain market conditions which demonstrate that the Group shall continue to operate within its own resources without recourse to the banking facilities available to it. The forecasts used for this exercise are based on various assumptions regarding expected levels of income and cost. They have stress tested these basic assumptions and this testing reveals that the Group can maintain acceptable cash levels even if it relies only on recurring revenue streams and maintains its existing cost base. A major factor allowing this to be the case is the flexible nature of the Group's performance related remuneration policy. As a result, the Directors believe, that at the time of approving the financial statements the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook and that the Company and the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they consider it appropriate to adopt the going concern basis in preparing the annual report and accounts.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial Assets
Investments are recognised and derecognised on trade date when the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as fair value. Financial assets are classified into the following specified categories: financial assets as 'at fair value through profit or loss'(FVTPL), 'available-for-sale investments', 'held to maturity investments', and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Effective interest rate method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial assets at fair value through profit or loss
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.
Trading investments pertain to investment securities which are held for trading purposes. These investments comprise both long and short positions and are initially measured at fair value excluding transaction costs. Subsequently and at each reporting date, these investments are measured at their fair values, with the resultant gains and losses arising from changes in fair value being taken to the income statement. Trading investments include securities and options over securities which have been received as consideration for corporate finance services rendered.
Financial assets are classified as financial assets at FVTPL where the Group acquires the financial asset principally for the purpose of selling in the near term, the financial asset is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit taking as well as all derivatives that are not designated and effective hedging instruments. Financial assets at fair value through profit or loss are stated at fair value, with any resulting gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
Held to maturity investments
Debentures with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.
Available-for-sale investments
Listed shares held by the Group that are traded in an active market are classified as available-for-sale investments and are initially measured at fair value, including transaction costs. At each reporting date, these investments are measured at their fair values and the resultant gains and losses, after adjusting for taxation, are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period.
Trade and other receivables
Market debtors are measured at fair value. Unpaid share premium and loans due from staff are initially measured at fair value and revalued to amortised cost at each subsequent reporting date. All other debtors are measured at amortised cost using the effective interest method, less any impairment. Appropriate allowance for estimated irrecoverable amounts is recognised in the profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Impairment of financial assets
Financial assets, other than those held for trading purposes or held at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For loans and receivables the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
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 a known amount of cash and are subject to an insignificant risk of changes in value.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities
Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL upon initial recognition. A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of disposal in the near future; or
• it is part of an identified portfolio of financial instruments that the Group manages together and has a recent pattern of short term profit taking; or
• it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the Group is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
Other financial liabilities
Trade payables are initially measured at fair value. At each reporting date, these trade payables are measured at amortised cost using the effective interest rate method.
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Derivative financial instruments
The Group has no significant exposure to derivative financial instruments but will occasionally enter into futures to manage its exposure to market risk.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Gains and losses arising during the period on transactions denominated in foreign currencies are treated as normal items of income and expenditure in the income statement.
Investments in subsidiary undertakings
Investments held as fixed assets are stated at cost, less any provision for diminution in value.
Operating leases
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its estimated useful life as follows:
Leasehold improvements:	Ten years
Fixtures and fittings:	Three years
IT equipment:	Three years
The carrying values of property, plant and equipment are subject to annual review and any impairment is charged to the income statement.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profits differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when 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.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other related taxes.
Revenue comprises fees for corporate finance advisory services which are taken to the income statement when the services are performed. Revenue also comprises profits on dealing operations, being gains less losses on shares, arrived at after taking into account attributable dividends and directly related interest, together with commission income receivable.
Interest income is recognised at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.
Revenue includes the fair value of options over securities which have been received as consideration for corporate finance services rendered.
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. These operating segments are identified on the basis of internal reports that are regularly reviewed by the Chief Executive to allocate resources and to assess performance. Using the Group's internal management reporting as a starting point the reporting segments set out in note 3 have been identified.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based payment. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
2. Critical accounting judgement and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of judgements, 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 managements best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The estimates and assumptions that have a significant effect on the carrying amounts of assets and liabilities are set out below:
a) Equity-settled share-based payments
The fair value of share-based payments is calculated by reference to a Monte Carlo simulation model. Inputs into the model are based on management's best estimates of appropriate volatility, discount rate and share price growth.
b) Valuation of investments
Trading investments include options over securities which have been received as consideration for corporate finance services rendered. The fair value of these investments have been calculated by reference to a Monte Carlo simulation model. Inputs into the model are based on management's best estimates of discount rate and share price growth. The volatility input has been calculated based on the volatility of historic share price movements.
c) Bad debt policy
The Group regularly reviews all outstanding balances including the unpaid amounts relating to the partly paid "B" shares and provides for amounts it considers irrecoverable. d) Provisions Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation.

3. Business and geographical segments
Adoption of IFRS 8, Operating Segments
The Group had adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance.
Products and services from which reportable segments derive their revenues
Based on its internal management reporting, the Group has identified three reportable segments and the following products and services provided by these segments:
Corporate broking and advisory
This segment provides corporate finance, corporate broking and market making services to small to mid cap companies and investment funds.
Institutional Equities
The institutional equities team currently provides research driven investment recommendations and execution capabilities to institutional clients.
Fund and Wealth Management
Offshore wealth management and stockbroking services are primarily provided through Cenkos Channel Islands Limited.
Our fund management business is primarily provided by Cenkos Fund Management Limited.

An analysis of the group's revenue and result by reportable segment is as follows:
			1 January 2010 to 31 December 2010
			Corporate		Fund
			Broking and	Institutional	and Wealth	Group
			Advisory	Equities	Management	Total
Segment revenues and results			£ 000's	£ 000's	£ 000's	£ 000's
Corporate finance			36,356	-	5	36,361
Corporate broking and market making			9,188	-	-	9,188
Research fees and commission			1,189	4,955	-	6,144
Management fees and stock broking services			-	-	8,614	8,614
Segment revenue			46,733	4,955	8,619	60,307
Administrative expenses			(27,862)	(3,421)	(6,572)	(37,855)
Segment results			18,871	1,534	2,047	22,452
Unallocated Administrative expenses						(15,469)
Operating Profit						6,983
Investment income - interest receivable						454
Loss on sale of available-for-sale financial asset						(294)
Finance costs - interest payable						(1)

Profit before tax						7,142
Tax						(2,318)
Profit for the year						4,824
			1 January 2010 to 31 December 2010
	Corporate		Fund
	Broking and	Institutional	and Wealth	Segment		Group
	Advisory	Equities	Management	Total	Unallocated	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Other segment information:
Assets	13,254	-	8,317	21,571	50,503	72,074
Liabilities	(3,481)	-	(5,832)	(9,313)	(35,506)	(44,819)
Depreciation and amortisation	-	-	66	66	280	346
Additions to Non-current assets	-	-	44	44	362	406
Segment assets have been allocated on the basis of the internal reports received by the Chief Executive for the purposes of monitoring segment performance and allocating resources between segments.
			1 January 2009 to 31 December 2009
			Corporate		Fund
			Broking and	Institutional	and Wealth	Group
			Advisory	Equities	Management	Total
Segment revenues and results			£ 000's	£ 000's	£ 000's	£ 000's
Corporate finance			25,157	-	5	25,162
Corporate broking and market making			8,860	-	-	8,860
Research fees and commission			1,566	4,706	-	6,272
Management fees and stock broking services			-	-	5,910	5,910
Segment revenue			35,583	4,706	5,915	46,204
Administrative expenses			(17,884)	(2,469)	(4,540)	(24,893)
Segment results			17,699	2,237	1,375	21,311
Unallocated Administrative expenses						(15,710)
Operating Profit						5,601
Investment income - interest receivable						1,903
Gain on sale of available-for-sale financial asset						254
Finance costs - interest payable						(258)
Profit before tax						7,500
Tax						(2,469)
Profit for the year						5,031
	1 January 2009 to 31 December 2009
	Corporate		Fund
	Broking and	Institutional	and Wealth	Segment		Group
	Advisory	Equities	Management	Total	Unallocated	Total
Other segment information:	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Assets	9,688	-	11,230	20,918	45,196	66,114
Liabilities	(2,058)	-	(9,080)	(11,138)	(26,171)	(37,309)
Depreciation and amortisation	-	-	60	60	267	327
Additions to Non-current assets	-	-	13	13	75	88
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 1. Segment profit represents the profit earned by each segment without allocation of the central administration costs, investment revenue and finance costs, and income tax expense. This is the measure reported to the Group's Chief Executive Officer for the purpose of resource allocation and assessment of segment performance.
An analysis of the group's revenue and result by geographical location is as follows:
Geographical information	1 January 2010 to 31 December 2010			1 January 2009 to 31 December 2009
	United	Channel	Group	United	Channel	Group
	Kingdom	Islands	Total	Kingdom	Islands	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Revenue (a)	53,464	6,843	60,307	41,585	4,619	46,204
Non-current assets	875	56	931	802	70	872
(a) Revenues are attributed on the basis of the entities location.
Major customers
The revenue generated from no one particular customer amounted to more than 10% of the Group's total revenue.
4. Investment income - interest receivable					1 January	1 January
					2010 to	2009 to
					31 December	31 December
					2010	2009
Interest income generated from:					£ 000's	£ 000's
Cash and cash equivalents					47	74
Trading investments					19	21
Trade and other receivables					388	1,808
					454	1,903
Interest income generated from trade and other receivables includes the recognition of the unwinding of the discount factor applied to the partly paid B shares, which amounted to £387,720 (2009: £1,808,484).
5. Finance costs - interest payable					1 January	1 January
					2010 to	2009 to
					31 December	31 December
					2010	2009
					£ 000's	£ 000's
Interest on bank overdrafts and loans					1	258
6. Staff costs
					1 January	1 January
					2010 to	2009 to
					31 December	31 December
					2010	2009
					£ 000's	£ 000's
Staff costs comprise:
Wages and salaries					31,702	21,445
Social security costs					4,075	3,007
IFRS 2 share-based payments					489	5,784
					36,266	30,236
The group does not operate any pension schemes.
6. Staff costs (continued)
The average number of employees (including executive directors) was:
					2010	2009
					No.	No.
Corporate finance					12	11
Corporate broking					85	71
Administration					42	41
					139	123
					£ 000's	£ 000's
The total emoluments of the highest paid director serving during the year were:					1,002	969
7. Profit for the year
Profit for the year has been arrived at after charging/(crediting):					1 January	1 January
					2010 to	2009 to
					31 December	31 December
					2010	2009
					£ 000's	£ 000's
Operating lease rentals					676	626
Auditor's remuneration (refer to analysis below)					544	171
Depreciation of property, plant and equipment					346	327
Staff costs (see note 6)					36,266	30,236
Change in fair value of financial assets designated as at fair value through profit or loss					108	(320)
Costs associated with aborted acquisition					1,285	-

The analysis of auditor's remuneration is as follows:					£ 000's	£ 000's
Fees payable to the Company's auditor for the audit of the Group's annual accounts and consolidation					112	102
Fees payable to the Company's auditor for other services:
- The audit of the Company's subsidiaries, pursuant to legislation					41	41

Total audit fees					153	143
- Other services, pursuant to legislation: Half year review					43	28
- Corporate finance services					348	-
Total non-audit fees					391	28
					544	171
A description of the work of the Audit Committee is set out within the Corporate Governance Report and includes an explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditor.
8. Non-recurring item
Changes to the B share employee incentive scheme
					1 January	1 January
					2010 to	2009 to
					31 December	31 December
					2010	2009
					£ 000's	£ 000's
Charge relating to the extension of repayment terms of the remaining B share loans					-	532
Fair value of options awarded under the Compensatory Award Plan 2009					-	4,455
Administrative Expenses					-	4,987
Credit relating to the acceleration of the discount due to the early repayment of the					-	(1,139)
B share loans where the shares were either placed or transferred to the EBT
Investment Income - interest receivable					-	(1,139)
					-	3,848
The following events occurred during the prior year in relation to B shares:
• on 21 May 2009, at the AGM, the Company resolved to extend the repayment term of the Unpaid share premium and loans due from staff from 1 July 2011 to 1 July 2013. • on 17 July 2009 the loans relating to 10.6 million B shares were repaid and the shares listed; and • on 22 October 2009, the loans relating to a further 1.43 million shares were repaid and the shares transferred to the Cenkos Securities Employee Incentive Trust. These changes to the expected cash flows have been reflected in the adjustments made to the carrying amount of the loans as at 31 December 2009 and result in a credit of £1,139,005 from the acceleration of the discount due to the early repayment of the loans relating to the shares listed and a debit of £532,404 from the extension of the repayment term of the remaining loans.
The events detailed above were the result of three options offered to the holders of B shares. These were to:
1. Continue to hold some or all of their B shares. 2. Transfer a portion of their converted B shares to Cenkos Securities Employee Incentive Trust (CSEIT), after settling the loan associated with the unpaid portion of the shares. 3. Place some or all of the converted B shares to third-party institutional investors, after settling the loan associated with the unpaid portion of the shares.

Where a B shareholder either transferred the converted B shares to the CSEIT or placed them with the third-party institutional investor, they became eligible for an award under the Compensatory Award Plan 2009 and entitled to a cash bonus under the Compensatory Award Phantom Dividend plan 2009.
The Compensatory Award Plan entitled the B shareholder to an award of options equivalent to the number of B shares transferred or placed at the transfer or placing price. These options are detailed below:
					2009
	Date of Grant & Vesting	Date of Expiry		Remaining contractual life, months	Number of shares options	Exercise price (in £)

Granted under the Compensatory Award Plan for shares placed	Jul-09	Jul-19		114	9,378,870	1.15
Granted under the Compensatory Award Plan for shares transferred	Oct-09	Oct-19		117	1,428,750	1.69
					10,807,620
The Group used the Monte-Carlo Simulation model to estimate the fair value of the options. The inputs to the model are as follows:
					2009


Expected volatility					30%
Expected share price growth					5%
Discount rate					25%

Expected volatility was determined by calculating the 20-day moving average of the share price since flotation. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. A 20% discount to the quoted market price was applied to the share price used in the valuation model to reflect the size of the tranches of share options and the liquidity in the shares.
These options vested immediately, so the estimated fair value of £4,454,457 was recognised as an expense, at the date of grant, by the Group.
The Compensatory Award Phantom Dividend plan 2009 entitles the B shareholder to a cash bonus equivalent to the amount of any dividend per share that the Company pays to ordinary shareholders multiplied by the number of share options awarded under the Compensatory Award Plan. This bonus was charged as an expense from the date of approval of a dividend by the Board.
9. Tax
The tax charge comprises:			1 January	1 January 2009 to 31 December 2009
			2010 to	Before non	Non	After non
			31 December	recurring	recurring	recurring
			2010	item	item	item
			£ 000's	£ 000's	£ 000's	£ 000's
Current tax
United Kingdom corporation tax at 28% (2009 - 28%) based on the profit for the period			2,200	2,967	-	2,967
Overseas tax charge borne by subsidiaries operating in other jurisdictions			5	-	-	-
Adjustment in respect of prior period
United Kingdom corporation tax			-	(345)	-	(345)
Overseas tax charge borne by subsidiaries operating in other jurisdictions			-	(9)	-	(9)
Total current tax			2,205	2,613	-	2,613
Deferred Tax
Credit on account of timing differences			-	(60)	(84)	(144)
Charge on account of timing differences			113	-	-	-
Total deferred tax			113	(60)	(84)	(144)

Total tax on profit on ordinary activities			2,318	2,553	(84)	2,469
The tax charge for the year differs from that resulting from applying the standard rate of UK corporation tax of 28% (2009: 28%) to the profit before tax for the reasons set out in the following reconciliation.
			1 January	1 January 2009 to 31 December 2009
			2010 to	Before non	Non	After non
			31 December	recurring	recurring	recurring
			2010	item	item	item
			£ 000's	£ 000's	£ 000's	£ 000's
Profit on ordinary activities before tax			7,142	11,348	(3,848)	7,500
Tax on profit on ordinary activities at the UK corporation tax rate of 28% (2009: 28%)			2,000	3,178	(1,077)	2,101
Tax effect of:
Depreciation in excess of capital allowances			11	18	-	18
Expenses that are not deductible in determining taxable profits			432	374	1,396	1,770
Non-allowable loss on sale of available-for-sale financial asset			294	-	-	-
Different tax rates of subsidiaries operating in other jurisdictions			(419)	(280)	-	(280)
Income not subject to corporation tax			(94)	(307)	(319)	(626)
Adjustment for IFRS2 relating to staff options			94	(60)	(84)	(144)
Tax effect of utilisation of losses not previously recognised			-	(25)	-	(25)
Adjustment in respect of prior period			-	(345)	-	(345)
					-
Tax expense for the period			2,318	2,553	(84)	2,469
In addition to the amount credited to the income statement, deferred tax relating to share-based payments amounting to £10,353 has been charged directly to equity (2009: £15,639 credited directly to equity).
			1 January	1 January 2009 to 31 December 2009
			2010 to	Before non	Non	After non
			31 December	recurring	recurring	recurring
			2010	item	item	item
Deferred tax			£ 000's	£ 000's	£ 000's	£ 000's

Arising on share-based payments			10	16	-	16
Total income tax recognised directly in equity			10	16	-	16
10. Dividends
Amounts recognised as distributions to equity holders in the period:					1 January	1 January
					2010 to	2009 to
					31 December	31 December
					2010	2009
					£ 000's	£ 000's
Final Dividend for the year ended 31 December 2009 of 5p (December 2008: 5p) per share					3,565	3,637
Interim dividend for the period to 30 June 2010 of 2p (June 2009: 15p) per share					1,425	10,910
Interim dividend for the period to 30 November 2010 of 2p (November 2009: 0p) per share					1,426	-
					6,416	14,547
A final dividend of 4p per share has been proposed for the year ended 31 December 2010 (2009: 5p), subject to approval at the Annual General Meeting to be held on 14 April 2011. The final dividend will be paid on 28 April 2011 to all shareholders on the register as at 25 March 2011.
11. Earnings per share
The calculation of the basis and diluted earnings per share is based on the following data:
			1 January	1 January 2009 to 31 December 2009
			2010 to	Before non	Non	After non
			31 December	recurring	recurring	recurring
			2010	item	item	item
			£ 000's	£ 000's	£ 000's	£ 000's
Earnings
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent			3,726	8,258	(3,764)	4,494
Effect of dilutive potential ordinary shares:
Share options			-	-	-	-
Earnings of the purposes of diluted earnings per share			3,726	8,258	(3,764)	4,494
					2010	2009
					No.	No.
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share					71,164,543	72,442,817
Effect of dilutive potential ordinary shares:
Share options					401,417	234,906
Weighted average number of ordinary shares for the purpose of diluted earnings per share					71,565,960	72,677,723

The denominators for the purposes of calculating both basic and diluted earnings per share have been adjusted to reflect the sub-division of shares on 31 October 2006. The weighted average number of shares considered for the current period also includes the total number of B shares, even though they are partly paid shares, as these shares are entitled to a full dividend payout. On 22 October 2009, 1,428,750 shares were transferred to the Cenkos Securities Employee Investment Trust and on 31 March 2010 it acquired a further 90,000 shares. These shares are held by the trust in treasury and have been included in the weighted average number of shares calculation up to these dates.
12. Provisions
A provision has been set up in respect of fees relating to costs relating to a legal case, which has recently been determined. A breakdown of the provision has not been given as any additional disclosure could, in the opinion of the directors, prove seriously prejudicial to the interests of the Group.
13. Share premium
					Group and Company	Group and Company
					2010	2009
					£ 000's	£ 000's
At 1 January					22,700	22,700
Cancellation of share premium account					(22,700)	-
At 31 December					-	22,700
On 17th November 2010, the court approved the cancellation of the Company's entire share premium account, which has been used to provide distributable reserves for the Company.
14. Subsequent events
Subsequent to the year end, there have been no events which have had a material impact on the estimates and provisions made within these accounts.
Additional Information
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation. Annual General Meeting The Annual General Meeting will be held at 12.00 noon on 14 April 2011 at 6.7.8 Tokenhouse Yard, London, EC2R 7AS.

This information is provided by RNS

The company news service from the London Stock Exchange

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