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Cenkos Securities plcInterim Report 2014

17745 Cenkos Interim 2014:Layout 1 22/09/2014 16:25 Page a

1 Summary information

2 Business review

7 Condensed consolidated income statement

8 Condensed consolidated statement of comprehensive income

9 Condensed consolidated statement of financial position

10 Condensed consolidated cash flow statement

11 Condensed consolidated statement of changes in equity

12 Notes to the condensed consolidated financial statements

29 Independent review report

30 Information for shareholders

Cenkos Securities plc Interim Report 2014

Contents

17745 Cenkos Interim 2014:Layout 1 22/09/2014 16:25 Page b

Cenkos Securities plc (the “Company” or “Cenkos”) together with its subsidiaries (the “Group”) is an independent,specialist institutional securities group, focused on UK small and mid-cap companies and investment funds. TheCompany’s principal activity is institutional stockbroking.

Cenkos’ shares are admitted to trading on AIM. The Company is authorised and regulated by the Financial ConductAuthority (“FCA”) and is a member of the London Stock Exchange (“LSE”).

Financial highlights30 June 30 June2014 2013

Revenue + 226% £65.2m £20.0m

Profit before tax + 653% £23.5m £3.1m

Basic earnings per share + 700% 31.2p 3.9p

Interim dividend per share declared + 100% 7.0p 3.5p

Cash + 164% £43.2m £16.3m

Operational highlightsNominated adviser or corporate broker / financial adviser to 127 companies 122 companies

Commenting on the interim results, Chief Executive Officer Jim Durkin noted:

“Our successful strategy of being a leading UK institutional broker to listed growth companies and investment funds hasled to us being profitable in every year since our formation in 2005. This approach continues to bear fruit and I ampleased to report a very strong performance for the first six months of 2014. Revenues, profits and earnings per share allincreased significantly. The first half results reflected the completion of a particularly large transaction in addition to thecompletion of a good number of regular transactions.

Given the overall result, the Board has declared an interim dividend of 7p per share, up 100% on last year. The Boardanticipates paying a full year dividend that is higher than last year and is additionally evaluating other means of deliveringreturns to shareholders during the remainder of this year, in particular share buy-backs, such that total distributions toshareholders for the year are expected to be significantly higher than last year.

We have made a good start to the second half of the year with an encouraging pipeline of deals.


Summary information

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Strategy and business model

Our strategy

Our prime strategy is to become the principal UK institutional broker to growth companies and investment funds who areadmitted to trading or listed on a UK market. We aim to achieve this through:

• understanding the needs of our clients, enabling us to provide successful fundraising and advice through aninnovative and entrepreneurial approach;

• delivering sustainable, diversified and growing income streams;

• adding high quality individuals to our teams; and

• managing costs and risks carefully;

thereby providing shareholder value through earnings growth as well as attractive cash returns to shareholders.

Our business model

We provide corporate finance, corporate broking and securities services to small and mid-cap growth companies acrossa wide range of industry sectors, including investment funds. We focus on companies that seek admission of their sharesto trading on AIM or the LSE’s main market, or companies that are already listed on those markets. For growingcompanies that require access to capital and international exposure, AIM’s flexibility, with its Nominated Adviser(“Nomad”) arrangements, provides a firm foundation for financing and corporate development. We offer our clients adviceand access to equity finance at all stages of their development.

Revenue streams

We earn fees from primary and secondary equity fundraising, acting as a key intermediary between growth companies orinvestment funds and institutional providers of capital. From when we were founded in 2005 to the end of June 2014 wehave raised almost £11 billion for our clients – mainly acting as sole broker.

We aim to provide equity financing and strong and supportive shareholder lists for companies and healthy returns forinstitutional investors. Corporate finance fees are earned from providing strategic advice and regulatory guidance toclients, as well as advice on all forms of corporate transactions including fundraisings, mergers and acquisitions,disposals, restructurings and tender offers. Fees are also generated from acting as Nomad, broker and/or financialadviser to our corporate clients. Commission is earned from execution and research services and revenue is alsogenerated from our market-making activities.

As corporate broker, our clients’ boards engage us to:

• create and maintain supportive shareholder registers;

• provide an informed and effective interface with shareholders and potential investors;

• provide appropriate dealing liquidity in their company’s shares; and

• advise on all pertinent market and regulatory issues.


Business review

2


Management systems and controls

We operate an efficient and flexible business model, well adapted to a highly regulated environment. It is thereforeimportant that we continue to maintain an appropriate and proportionate level of systems and controls, commensuratewith our size and complexity. We manage our cost base carefully. We offer our client facing staff relatively low basicsalaries but reward their performance based on factors that include their net income generation. This cost flexibility allowsus to manage economic downturns better than many of our competitors who have higher levels of fixed or guaranteedpay. We selectively use outsourcing partners to help us maintain this cost flexibility in areas where volumes can beunpredictable. Our settlement, core trading systems and associated support are outsourced.

Culture and people

Our success is based on maintaining experienced and stable teams, whose members build professional relationshipsand achieve results through a committed and entrepreneurial approach. We endeavour to remunerate our staff to a levelwhich not only retains them but also motivates them to perform in line with the longer-term growth objectives of theCompany.

Our key objectives and key performance indicators (“KPIs”)

Our key objectives are to:

• grow the business by both retaining existing corporate clients and winning new ones, helping clients achieve theirstrategies through the provision of advice and fundraising capabilities, ensuring we have the right calibre andquantity of staff deployed to support this; and

• reward our shareholders by remaining profitable and generating a high return on equity (within acceptable risk limits),leading to an attractive dividend yield and strong share price growth.

Our KPIs include, but are not limited to, measures such as:

• profit before tax and earnings per share;

• the size and quality of our corporate client base (Nomad / broker appointments); and

• various key risk indicators, including capital resources and cash.

Commentary on KPIs is included in the review of performance noted below.

Review of performance

Overall performance

We are pleased to report that the Company had a very strong performance for the six months ending 30 June 2014. Asat 30 June 2014 we were nominated adviser, broker or financial adviser to 127 companies or trusts (30 June 2013: 122).Revenues grew on the back of increased fundraising for our growing list of clients. Costs rose primarily due to greaterperformance-related pay on the back of increased profitability.

Profit before tax was £23.5m (H1 2013: £3.1m). As noted below, this 653% increase reflected a very material rise inrevenues and the benefits of operational gearing in the business. This has meant that basic earnings per share rose by700% to 31.2p (H1 2013: 3.9p) and diluted earnings per share rose by 662% to 29.7p (H1 2013: 3.9p).

Our business model is built around a low fixed cost base and a remuneration structure which is highly geared toperformance. We maintain a positive operating cash cycle and a limited exposure to credit and market risk. This,combined with the high quality, dedication and experience of our employees, has enabled Cenkos to produce thisperformance.


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Revenues

Revenue for the period increased by 226% to £65.2m (H1 2013: £20.0m). The economic recovery the UK isexperiencing has clearly benefited equity markets with the total funds being raised by all companies on AIM rising by161% to £3,707m from H1 2013 to H1 2014 (source: LSE AIM factsheet June 2014). We have been well positioned tobenefit from this tailwind given our strong market position and continued profitability. We remain ranked as one of theleading brokers in London for growth companies, as demonstrated by Adviser Rankings’ July 2014 ‘AIM AdviserRankings Guide’ where we were ranked second in terms of both ‘Nomad’ and ‘Stockbroker’ for all AIM clients bynumber of clients, as well as being ranked top ‘Nomad’ for Oil and Gas and Consumer Services, second for Industrialclients and third for both Financials and Technology companies by number of AIM clients.

During the period we completed eighteen transactions – including six IPOs – and helped our clients raise a total of£2,209m, including £1,385m on the IPO of the AA plc (H1 2013: £422m). In the period we also completed four M&Acorporate finance transactions (H1 2013: two). Our corporate finance revenue (including fees from placings) rose 315%to £54.2m in H1 2014 (H1 2013: £13.1m).

We make markets in the securities of all the companies where we have a broking relationship to support the otherservices we provide to our clients. We actively provide liquidity to the market and facilitate institutional business in bothsmall and large cap equities. Our trading desks now make markets in the shares of 340 (H1 2013: 333) companies andinvestment trusts.

Our corporate broking, market-making, research and commission revenues rose 59% to £11.0m in H1 2014 (H1 2013:£6.9m) on the back of more favourable trading conditions. However, the pressure on secondary commissions shows nosign of relenting, including the potential impact of recent FCA initiatives in terms of payment for equity research. We areconfident that we can continue to prosper in this environment because of our flexible cost model.

Our execution business is primarily focused on client facilitation. We believe that this enhances Cenkos’ overall serviceoffering to its expanding client base.

Costs

Costs rose by £24.8m (143%) in the period, primarily due to higher performance-related pay on the back of increasedprofitability. Additionally, we have grown our staff numbers by 10% and incurred a £0.9m rise in costs due to staffbonuses resulting from the Compensatory Award Phantom Dividend Plan 2009 (“CAP”). Payments under this scheme areonly triggered by the payment of a dividend to ordinary shareholders. This amounted to an 8.5p final dividend for 2013paid in H1 2014 (4p for 2012’s final dividend paid in H1 2013).

Profit before tax increased by 653% to £23.5m (H1 2013: £3.1m) and profit after tax increased by 702% to £18.8m(H1 2013: £2.3m).

Statement of consolidated financial position and cash flow

At 30 June 2014, our net trading investments were £26.0m, and cash held was £43.2m (H1 2013: £16.3m). During thesix months to 30 June 2014 there was a net increase in cash and cash equivalents of £12.9m. This is largely due to thecash inflow from the Company’s profitable trading in H1 2014 offset partly by the payment of accrued bonuses in respectof 2013, the 2013 final dividend of 8.5p per share and corporation tax payments.

Dividend and capital levels

As we have consistently stated, we intend to retain sufficient capital and reserves to meet the Company’s regulatorycapital and cash requirements after taking account of the likely future working capital needs and potential growthrequirements of the Company. Since our flotation onto AIM in October 2006, we have paid out 84.5p in dividends prior tothe 7p proposed interim dividend for 2014 and bought back 9.3m shares at a cost of £6.5m for cancellation, therebyincreasing the Company’s prospective earnings per share. In addition, 3.1m shares have been purchased by the CenkosSecurities Employee Benefit Trust (“EBT”) at a cost of £3.2m.


Business review continued

4


The Board proposes an interim dividend of 7p per share, an increase of 100% on last year’s interim dividend of 3.5p pershare. The payment of this interim dividend will trigger payments to staff under the CAP of £1.1m in the second half of2014 (second half 2013: £0.8m). The dividend will be paid on 6 November 2014 to all shareholders on the register at 10October 2014. The Board anticipates paying a full year (ie interim and final) dividend that is higher than the 12p paid withrespect to 2013. Given the strong results in H1 2014, the Board is also evaluating other means of delivering returns toshareholders during the remainder of the year, in particular share buy-backs, such that total distributions to shareholdersfor the year are expected to be significantly higher than last year.

People

The continued professionalism of our employees has enabled us to achieve the robust performance for the period. Wecontinue to look to recruit staff who are attracted by our culture and business model, and a further nine staff joined us inH1 2014. We endeavour to remunerate our staff to a level and in a manner which not only retains but also motivatesthem to perform in line with the longer-term growth objectives of the Company. Their skill, commitment and determinationwill continue to provide us with a solid platform on which to continue to build our franchise. In July 2014 we launched twoHM Revenue and Customs approved all staff share schemes – a Share Incentive Plan and Save As You Earn SharesaveScheme – both of which were well received by staff.

Principal risks and uncertainties

The principal risks and uncertainties that Cenkos currently faces, and how these are managed, have not materiallychanged from those outlined in the Strategic Report section of our 2013 Annual Report, namely the health of UK equitymarkets as well as reputational, operational, regulatory, conduct and market risk. Aside from the health of UK equitymarkets, the key changes that may impact Cenkos’ risk profile over the next six months – and how they are beingmanaged – relate to:

• The pace of change in the regulatory environment – we continue to focus heavily on our regulatory risks to ensurethe appropriate systems and controls, reporting, capital and liquidity requirements, resources and culture are all inplace to meet the ongoing obligations of an FCA regulated (IFPRU Investment) firm; and

• Ensuring that we continue to retain and attract high quality staff. We continue to pursue a policy of maintaining a lowfixed cost base including low basic salaries and rewarding net income generation.

Outlook

Our successful strategy of being a leading UK institutional broker to listed growth companies has led to us beingprofitable in every year since our formation in 2005. This approach continues to bear fruit and, given our results for thefirst half of the year, the Board has declared an interim dividend of 7p per share, up 100% on last year. The Boardanticipates paying a full year dividend that is higher than last year. The Board is also evaluating other means of deliveringadditional distributions to shareholders during the remainder of this year, in particular share buy-backs, such that totaldistributions for the year are expected to be significantly higher than last year.

We have made a good start to the second half of 2014 with an encouraging pipeline of deals.

Jim DurkinChief Executive Officer

16 September 2014


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Responsibility statement

We confirm that to the best of our knowledge:

a) The condensed set of financial statements, prepared in accordance with the applicable set of accounting standards,give a true and fair view of the assets, liabilities, financial position and profit of Cenkos Securities plc and theundertakings included in the consolidation taken as a whole as at 30 June 2014, and

b) The interim management report set out in the Business Review includes a fair review of the development andperformance of the business and the position of Cenkos Securities plc and the undertakings included in theconsolidation taken as a whole, together with a description of the principal risks and uncertainties that the Companyfaces.

Forward-looking statements

These financial statements contain forward-looking statements with respect to the financial condition, results, operationsand businesses of Cenkos Securities plc. Although the Company believes that the expectations reflected in theseforward-looking statements are reasonable, we can give no assurance that these expectations will prove to have beencorrect. Such statements and forecasts involve risk and uncertainty because they relate to events and depend uponcircumstances that will occur in the future. There are a number of factors that could cause actual results or developmentsto differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-lookingstatements and forecasts are based on the Directors’ current view and information known to them at the date of thisstatement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise.


Business review continued

6


Unaudited UnauditedSix months Six months Audited

ended ended Year endedNote 30 June 30 June 31 December

2014 2013 2013£ 000’s £ 000’s £ 000’s

Continuing operationsRevenue 2 65,225 19,995 51,433Administrative expenses (41,757) (16,969) (40,856)

Operating profit 23,468 3,026 10,577Investment income – interest income 77 102 135Interest expense (1) – (1)

Profit before tax from continuing operations 23,544 3,128 10,711Tax 3 (4,751) (786) (2,122)

Profit after tax 18,793 2,342 8,589

Attributable to:Equity holders of the parent 18,793 2,342 8,589

Basic earnings per share 5 31.2p 3.9p 14.2pDiluted earnings per share 5 29.7p 3.9p 14.2p


Condensed consolidated income statement for the six months ended 30 June 2014

7



8


ended ended Year ended30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Profit 18,793 2,342 8,589

Total comprehensive income 18,793 2,342 8,589

Attributable to:Equity holders of the parent 18,793 2,342 8,589

Condensed consolidated statement of comprehensive incomefor the six months ended 30 June 2014



9

Unaudited Unaudited AuditedNotes 30 June 30 June 31 December

2014 2013 2013£ 000’s £ 000’s £ 000’s

Non-current assetsProperty, plant and equipment 6 480 499 387Deferred tax asset 11 2,794 330 1,024

3,274 829 1,411Current assetsTrade and other receivables 7 47,777 30,857 19,349Available-for-sale financial asset 1,000 1,000 1,080Other current financial assets 8 29,876 10,144 13,706Cash and cash equivalents 9 43,156 16,343 30,343

121,809 58,344 64,478

Total assets 125,083 59,173 65,889

Current liabilitiesTrade and other payables 10 (79,929) (33,451) (35,508)Other current financial liabilities 8 (3,915) (4,029) (4,289)

(83,844) (37,480) (39,797)

Net current assets 37,965 20,864 24,681

Total liabilities (83,844) (37,480) (39,797)

Net assets 41,239 21,693 26,092

EquityShare capital 12 635 635 635Share premium 9 – –Capital redemption reserve 93 93 93Own shares 13 (3,228) (3,180) (3,228)Retained earnings 43,730 24,145 28,592

Total equity 41,239 21,693 26,092

The figures as at 30 June 2013 have been restated to reflect the transfer of the nominal value of the shares purchasedand cancelled by the Company to capital redemption reserve.

Condensed consolidated statement of financial position as at 30 June 2014



10


ended ended Year endedNote 30 June 30 June 31 December

2014 2013 2013£ 000’s £ 000’s £ 000’s

Profit 18,793 2,342 8,589Adjustments for:Net finance income (76) (102) (134)Tax expense 4,751 786 2,122Depreciation of property, plant and equipment 185 159 311Shares in lieu of fees and options received in kind (11,961) (2,005) (1,335)Share-based payment expense 57 76 138

Operating cash flows before movements inworking capital 11,749 1,256 9,691

(Increase) / decrease in net trading investments (4,503) 2,828 (1,212)Increase in trade and other receivables (28,436) (15,255) (3,742)Increase in trade and other payables 41,131 9,326 10,406

Cash flow from / (used in) operating activities 19,941 (1,845) 15,143Interest paid (1) – (1)Tax paid (1,816) (1,055) (1,871)

Net cash flow from / (used in) operating activities 18,124 (2,900) 13,271

Investing activitiesInterest received 85 34 62Purchase of property, plant and equipment 6 (277) (108) (148)

Net cash flow (used in) investing activities (192) (74) (86)

Financing activitiesDividends paid (5,128) (2,430) (4,541)Proceeds from issue of own shares 9 – –Acquisition of own shares by the EBT – (235) (283)Acquisition of own shares for cancellation – (289) (289)

Net cash (used in) financing activities (5,119) (2,954) (5,113)

Net increase / (decrease) in cash and cash equivalents 12,813 (5,928) 8,072Cash and cash equivalents at beginning of period 30,343 22,271 22,271

Cash and cash equivalents at end of period 9 43,156 16,343 30,343

The figures for the six months ended 30 June 2013 have been restated to reflect the transfer of the nominal value of theshares purchased and cancelled by the Company to capital redemption reserve.

Condensed consolidated cash flow statement for the six months ended 30 June 2014



11

CapitalShare Share redemption Own Retainedcapital premium reserve shares earnings Total£ 000's £ 000's £ 000's £ 000's £ 000's £ 000's

Attributable to equity holders of theparent at 1 January 2013 638 – 90 (2,945) 24,446 22,229

Profit – – – – 2,342 2,342

Total comprehensive income – – – – 2,342 2,342Own shares acquired in the period – – – (235) – (235)Own shares acquired for cancellation in

the period (3) – 3 – (289) (289)Credit to equity for equity-settled

share-based payments – – – – 76 76Dividends paid – – – – (2,430) (2,430)

Attributable to equity holders ofthe parent at 30 June 2013 635 – 93 (3,180) 24,145 21,693

Profit – – – – 6,247 6,247

Total comprehensive income – – – – 6,247 6,247Own shares acquired in the period – – – (48) – (48)Credit to equity for equity-settled

share-based payments – – – – 62 62Credit to equity for day 1 valuation of

acquired share options – – – – 12 12Deferred tax on share-based payments – – – – 237 237Dividends paid – – – – (2,111) (2,111)

Attributable to equity holders of theparent at 31 December 2013 635 – 93 (3,228) 28,592 26,092

Retained profit – – – – 18,793 18,793

Total comprehensive income – – – – 18,793 18,793Shares issued in the period – 9 – – – 9Credit to equity for equity-settled share-basedpayments – – – – 57 57Deferred tax on share-based payments – – – – 1,416 1,416Dividends paid – – – – (5,128) (5,128)

At 30 June 2014 635 9 93 (3,228) 43,730 41,239

The figures as at 1 January 2013 and for six months ended 30 June 2013 have been restated to reflect the transfer of thenominal value of the shares purchased and cancelled by the Company to capital redemption reserve.

Condensed consolidated statement of changes in equityfor the six months ended 30 June 2014



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1. Accounting policies

General Information

The interim condensed consolidated financial statements of Cenkos Securities plc (“Cenkos” or the “Company”together with its subsidiaries) for the six months ended 30 June 2014 are unaudited and were approved by theBoard of Directors for issue on 16 September 2014.

The Company is incorporated in the United Kingdom under the Companies Act 2006 (company registration No.05210733), whose shares are publicly traded. The Company’s principal activity is as an institutional stockbroker toUK small and mid-cap companies and investment funds. These financial statements are presented in poundssterling because that is the currency of the primary economic environment in which the Company operates.

The preparation of financial statements in conformity with generally accepted accounting principles requires the useof estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Although theseestimates are based on management’s best knowledge of the amount, event or actions, actual results ultimatelymay differ from those of estimates. These financial statements have been prepared on the historical cost basis,except for the revaluation of certain financial instruments.

Prior year comparatives have been amended to reflect the transfer of the nominal value of the shares purchasedand cancelled by the Company from retained earnings to the capital redemption reserve. The impact of this is solelywithin total equity.

Basis of accounting

The interim condensed consolidated financial statements for the six months ended 30 June 2014 have beenprepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting. The interimcondensed consolidated financial statements do not include all the information and disclosures required in theannual financial statements, and should be read in conjunction with the Company’s annual financial statements forthe year ended 31 December 2013.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements areconsistent with those followed in the preparation of the Company’s annual financial statements for the year ended31 December 2013, which are prepared in accordance with International Financial Reporting Standards (“IFRS”) asadopted by the European Union. The financial information contained in these interim condensed consolidatedfinancial statements does not constitute the Company’s statutory accounts within the meaning of section 434 of theCompanies Act 2006. The comparative information contained in this report for the year ended 31 December 2013does not constitute the statutory accounts for that financial period. Those accounts have been reported on by theCompany’s auditors Ernst & Young LLP, and delivered to the Registrar of Companies. The report of the auditorswas unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Going concern

The Company’s business activities, together with the factors likely to affect its future development and performance,its principal risks and uncertainties and the financial position of the Company, are set out in the Company’s AnnualReport for the year ended 31 December 2013.

The Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeablefuture, a period of not less than 12 months from the date of this report. Accordingly, the Directors continue to adopta going concern basis in preparing the interim financial statements.

Adoption of new and revised standards

During the period, a number of amendments to IFRS’s became effective and were adopted by the Company, noneof which had a material impact on the Company’s net cash flows, financial position, statement of comprehensiveincome or earnings per share.

Notes to the condensed consolidated financial statements



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2. Business and geographical segments

Cenkos is managed as an integrated UK institutional stockbroking business and although it has different revenuestreams, the nature of its activities is considered to be subject to similar economic characteristics. The internalreports used by the Chief Executive Officer for the purpose of monitoring performance and allocating resourcesreflect that Cenkos is managed as a single business unit.

Revenue is wholly attributable to the principal activity of the Company and arises solely within the UK.

Major clients

In the six months ended 30 June 2014, one of Cenkos’ clients contributed more than 10% of Cenkos’ totalrevenue. The amount was £31.50 million (six months ended 30 June 2013: nil; year ended 31 December 2013:£6.43 million).

3. TaxSix months Six months


£ 000's £ 000's £ 000's

The tax charge comprises:

Current tax

United Kingdom corporation tax at 21.50% (2013: 23.25%)based on the profit for 5,105 843 2,612

Adjustment in respect of prior periodUnited Kingdom corporation tax at 23.25% (2012: 24.5%) – – 25

Total current tax 5,105 843 2,637

Deferred tax

Credit on account of temporary differences (354) (57) (495)Deferred tax prior year – – (20)

Total deferred tax (354) (57) (515)

Total tax on profit on ordinary activities 4,751 786 2,122

The tax charge for the period differs from that resulting from applying the standard rate of UK corporation tax of21.50% (2013: 23.25%) to the profit before tax for the reasons set out in the following reconciliation:


Notes to the condensed consolidated financial statements continued

3. Tax continuedSix months Six months


£ 000's £ 000's £ 000's

Profit before tax 23,544 3,128 10,711

Tax on profit on ordinary activities at the UK corporationtax rate of 21.50% (2013: 23.25%) 5,062 727 2,491

Tax effect of:Expenses that are not deductible in determining

taxable profits 43 64 104Income not subject to corporation tax – (15) (15)Recognition of deferred tax on share-based payments

previously unrecognised (390) – (621)Deferred tax rate change adjustment 36 148Adjustment for loss relief not claimed – 10 10Adjustment in respect of prior period deferred tax – – (20)Adjustment in respect of prior period current tax – – 25

Tax expense for the period 4,751 786 2,122

In addition to the amount credited to the income statement, deferred tax relating to share-based paymentsamounting to £1,416,548 has been charged directly to equity (six months ended 30 June 2013: £ nil, year ended31 December 2013: £236,520).

4. Dividends

Six months Six monthsended ended Year ended30 June 30 June 31 December2014 2013 2013

£ 000's £ 000's £ 000's

Amounts recognised as distributions to equity holdersin the period:

Final dividend for the year ended 31 December 2013 of 8.5p(2012: 4.0p) per share 5,128 2,430 2,430

Interim dividend for the period to 30 June 2013 of 3.5p(June 2012: 3.5p) per share – – 2,111

5,128 2,430 4,541

The proposed interim dividend for 30 June 2014 of 7p (30 June 2013: 3.5p) per share was approved by the Boardon 16 September 2014 and has not been included as a liability as at 30 June 2014. The dividend will be payable on6 November 2014 to all shareholders on the register at 10 October 2014.

Under the Compensatory Award Plan (“CAP”), as described in the 2013 Annual Report, the payment of a dividendto ordinary shareholders will trigger a cash payment to holders of options under the CAP. The payment of thisinterim dividend will increase staff costs by £1.11 million in H2 2014 (3.5p 2013 interim dividend increased staffcosts by £0.77 million in H2 2013).


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15

5. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:


Basic earnings per share 31.2p 3.9p 14.2p

Diluted earnings per share 29.7p 3.9p 14.2p

Earnings for the purpose of basic and dilutedearnings per share

The calculation of the basic and diluted earnings pershare is based on the following data:

£ 000's £ 000's £ 000's

Earnings for the purpose of basic and diluted earningsper share being net profit attributable to equity holdersof the parent 18,793 2,342 8,589

No. No. No.

Number of sharesWeighted average number of ordinary shares for the

purpose of basic earnings per share 60,327,458 60,725,002 60,525,904

Effect of dilutive potential ordinary shares:Share options 2,857,571 – –

Weighted average number of ordinary shares for thepurpose of diluted earnings per share 63,185,029 60,725,002 60,525,904

The loans associated with the B shares were fully paid up by 30 June 2013 and the B shares converted to Ordinaryshares. The calculation of the weighted average number of shares in prior periods included the total number of Bshares, even though they were partly paid, as these shares were entitled to a full dividend payout.

The Board has agreed to continue to fund the Company’s Employee Benefit Trust (“EBT”) so that it can makemarket purchases in Cenkos Securities plc shares as and when market conditions allow. During the period,however, no further shares were purchased. As at 30 June 2014 the EBT held a total of 3,158,477 ordinary sharesat an aggregate consideration of £3.23 million, as shown in note 13. These shares are held by the trust in treasuryand have been excluded from the weighted average number of shares calculation.

6. Property, plant & equipment

During the period, the Company spent approximately £276,565 (30 June 2013: £107,965, 31 December 2013:£147,953) on property, plant and equipment. This mostly related to the purchase of IT equipment and leaseholdimprovements.



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7. Trade and other receivables30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Current assetsMarket and client receivables 45,606 28,188 17,396Unpaid share capital and loans due from staff – – 2Prepayments and accrued income 1,573 1,898 1,244Other receivables 598 771 707

47,777 30,857 19,349

8. Financial assets and liabilities30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Financial assets at FVTPLTrading investments carried at fair value 29,380 9,522 12,567Derivative financial assets 496 622 1,139

29,876 10,144 13,706

Financial liabilities at FVTPLContractual obligation to acquire securities (3,915) (4,029) (4,289)

9. Cash and cash equivalents30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Cash and cash equivalents 43,156 16,343 30,343

10. Trade and other payables30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Trade creditors 40,822 22,102 14,401Corporation tax payable 5,105 838 1,816Accruals and deferred income 33,508 9,730 18,724Other creditors 494 781 567

79,929 33,451 35,508




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11. Deferred tax asset

Deferred tax arises on all taxable and deductible temporary differences at the balance sheet date between the taxbases of assets and liabilities and their carrying amounts for financial reporting purposes. In the table below, theCompany has recognised deferred tax assets on temporary differences relating to bonus payments, fixed assetsand share options.

Bonus Fixed Sharepayments assets options Total£ 000’s £ 000’s £ 000’s £ 000’s

At 31 December 2012 243 29 – 272Increase on account of temporary

differences – current year 38 – – 38Increase on account of temporary

differences – prior year 20 – – 20

At 30 June 2013 301 29 – 330(Decrease) / increase on account of

temporary differences – current year (71) (2) 530 457Charge to equity – – 237 237

At 31 December 2013 230 27 767 1,024(Decrease) / increase on account of

temporary differences – current year (36) (1) 391 354Charge to equity – – 1,416 1,416

At 30 June 2014 194 26 2,574 2,794

The £2,573,846 deferred tax asset arising from share options reflects the increase in the Company’s share price,with the share price at 30 June 2014 being above the options’ exercise price.

The Finance Bill 2013 was substantively enacted on 2 July 2013. The reduction to the standard rate of corporationtax from 21% to 20% will be effective from 1 April 2015. Accordingly, the deferred tax balances at 30 June 2014have been stated at 20% as this is expected the prevailing rate when the individual temporary differences areexpected to reverse.

The Group has unutilised capital losses on which a deferred tax asset has not been recognised as future utilisationof the losses is dependent on future chargeable gains which are uncertain. The unrecognised deferred tax asset inrespect of capital losses carried forward is gross £302,261 (net £60,452 at 20%).



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12. Share capital

The issued share capital as at 30 June 2014 amounted to £634,921 (30 June 2013: £634,821, 31 December2013: £634,821).

1 January 2013 to 31 December 2013

On 29 January 2013, 50,000 B shares of 1p each were converted into 50,000 ordinary shares of 1p each.

On 14 May 2013, 20,338 B shares of 1p each were converted into 20,338 ordinary shares of 1p each.




On 17 June 2013, 1,200,000 B shares of 1p each were converted into 1,200,000 ordinary shares of 1p each.

On 19 June 2013, 540,000 B shares of 1p each were converted into 540,000 ordinary shares of 1p each.

On 29 January 2013, the Company purchased in the market 215,837 ordinary shares of 1p at 75p each. Theseshares were cancelled by the Company and an amount equivalent to the nominal value of the shares wastransferred to the capital redemption reserve. On 24 May 2013, the Company purchased in the market 140,000ordinary shares of 1p at 90p each. These shares were cancelled by the Company and an amount equivalent to thenominal value of the shares was transferred to the capital redemption reserve.

The ordinary shares are admitted to trading on AIM. The B shares were not admitted to trading on AIM. The Bshares were issued on a partly-paid basis to certain employees prior to the Company’s admission and trading onAIM in October 2006. Holders of the B shares were required to pay the required premium which was specified atthe time of allotment of the B shares. Upon payment of the required premium the B shares convert automaticallyinto ordinary shares and are admitted to trading on AIM. All shares have equal voting rights. The required premiumwas paid up in full by 30 June 2013 and all B shares were converted into ordinary shares and admitted to tradingon AIM.

1 January 2014 to 30 June 2014

On 23rd April 2014, 10,000 ordinary shares of 1p each were issued following the exercise of 10,000 options inaccordance with the Company’s Long Term Incentive Plan.




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13. Own shares

The purpose of the Company’s EBT is to assist and encourage the holding of shares in the Company by employeesfor their benefit with a view to facilitating their recruitment, retention and motivation. During the period no furthershares were purchased. As at 30 June 2014 the EBT held a total of 3,158,477 ordinary shares at an aggregateconsideration of £3.23 million, as shown in the table below.

Six months ended Six months ended Year ended30 June 2014 30 June 2013 31 December 2013

Number Number Numberof shares £ 000’s of shares £ 000’s of shares £ 000’s

At 1 January 3,158,477 3,228 2,843,724 2,945 2,843,724 2,945Acquired during the period – – 263,503 235 314,753 283

At the period ended 3,158,477 3,228 3,107,227 3,180 3,158,477 3,228

14. Financial instruments

Capital risk management

The Company manages capital to ensure that the Company and its subsidiaries will be able to continue as a goingconcern while aiming to maximise the return to shareholders. The capital structure of the Company consists ofequity attributable to equity holders of the parent comprising issued capital, reserves and retained earnings asdisclosed in the condensed consolidated statement of changes in equity. At present the Company has no gearingand it is the responsibility of the Board to review the Company’s gearing levels on an ongoing basis. As at 30 June2014, Cenkos Securities plc had a solvency ratio of 145% (30 June 2013: 205%, 31 December 2013: 196%).

Externally imposed capital requirement

The Company has to retain sufficient capital to satisfy the UK Financial Conduct Authority’s (“FCA”) capitalrequirements. These requirements vary from time to time depending on the business conducted by the Company.The Company always retains a buffer above the FCA minimum requirement and has complied with theserequirements during the period under review.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis ofmeasurement and the basis on which income and expenses are recognised in respect of each class of financialasset, financial liability and equity instrument are disclosed in note 1 of the Company’s financial statements for theyear ended 31 December 2013.



20

14. Financial instruments continued

Categories of financial instrumentsCarrying value

30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Available-for-sale investments 1,000 1,000 1,080

Financial assets at fair value through profitand loss (FVTPL)

Trading investments carried at fair value 29,380 9,522 12,567Derivative financial assets 496 622 1,139

Financial liabilities at fair value through profitand loss (FVTPL)

Trading investments carried at fair value 3,915 4,029 4,289

Financial liabilities held at amortised costAmortised cost 79,929 33,451 35,508

Financial risk management objectives

The Chief Executive Officer monitors and manages the financial risks relating to the operations of the Companythrough internal risk reports which analyse exposures by degree and magnitude of risks. These risks include marketrisk (including price risk), credit risk and liquidity risk. Summaries of these reports are reviewed by the Board.

Compliance with policies and exposure limits is reviewed by the Chief Executive Officer and senior management ona continuous basis. The Company does not enter into or trade financial instruments, including derivative financialinstruments, for speculative purposes.

Interest rate risk management

The Company is exposed to interest rate risk because it has financial instruments on its statement of financialposition which are at both fixed and floating interest rates. The risk is managed by the Company by maintaining anappropriate mix between fixed and floating rate instruments.

The Company’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity andinterest rate risk table section of this note.

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives andnon-derivative instruments at the balance sheet date. For floating rate assets, the analysis is prepared based on theaverage rate due on the asset or liability through the period. A 25 basis points increase or decrease is used whenreporting interest rate risk internally to senior management and represents management’s assessment of areasonably possible change in interest rates.

If interest rates had been 25 basis points higher / lower and all other variables were held constant, the Company’s:

• profit for the period ended 30 June 2014 would increase / decrease by £0.04 million (30 June 2013: increase /decrease by £0.03 million, 31 December 2013: increase / decrease by £0.03 million). This is mainly attributableto the Company’s exposure to interest rates on its variable rate instruments; and

• other comprehensive income for the period ended 30 June 2014 would increase / decrease by £0.04 million(30 June 2013: increase/decrease by £0.03 million, 31 December 2013: increase / decrease by £0.03 million).




21


Equity price risks

The Company is exposed to equity price risks arising from equity investments. The financial instruments representinvestments in listed equity securities that present the Company with opportunity for return through dividendincome and trading gains. There are limits set for each financial instrument to limit the concentration of risks.

Equity price sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to equity price risks at the reportingdate and, in the opinion of senior management, a material movement in equity prices. This is based on the largestfall in the All Share AIM index in one day and over a two week period. These parameters are also considered in theCompany’s Individual Liquidity Adequacy Assessment (ILAA).

If equity prices had been 10% higher/lower:

• Net profit for the 6 months ended 30 June 2014 would have been £2.55 million higher / lower (30 June 2013:£0.55 million higher / lower, 31 December 2013: £1.05 million higher / lower) due to a change in the value ofFVTPL held-for-trading investments.

The Company’s exposure to equity price risk is closely managed. The Company has built a framework of overalland individual stock limits and these are actively monitored by the Chief Executive Officer and senior managementon a daily basis. This framework also limits the concentration of risks. The Company’s overall appetite for exposureto equity price risk is set by the Board.

Foreign currency risk

The Company does not have any material dealings in foreign currency, as the majority of transactions are in UKbased equities and hence denominated in sterling.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss tothe Company. These parties may default on their obligations due to bankruptcy, lack of liquidity, operational failureand other reasons. The exposure of the Company to its counterparties is closely monitored and limits are set tominimise the concentration of risks.

The vast majority of the Company’s credit risk arises from the settlement of security transactions. However, thesettlement model primarily used by the Company does not expose the Company to counterparty risk as a principalto a trade. Rather, the Company’s exposure lies solely with Pershing Securities Limited (“Pershing”), a wholly ownedsubsidiary of the Bank of New York Mellon Corporation, a AA- (2013: AA-) rated bank. In addition, in circumstancesin which the Company does act as principal when acting as a market maker, the counterparty will normally be anFCA regulated market counterparty rather than a corporate or individual trader. The Company does not have anysignificant credit risk exposure to any single counterparty with the exception of Pershing.

Cash resources also give rise to potential credit risk. The Company’s cash balances are held with HSBC Bank plc(an AA- rated bank), Royal Bank of Scotland plc (an A rated bank), Barclays Bank plc (an A rated bank) andPershing. The banks with which the Company deposits money are reviewed at least annually by the Board and arerequired to have at least an investment grade credit rating. To limit the concentration risk in relation to cashdeposits, the maximum amount which may be deposited with any one financial institution is set at no more than100% of the Company’s regulatory capital.



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Trade receivables not related to the settlement of market transactions consist almost entirely of outstandingcorporate finance fees and retainers and are spread across a wide range of industries. All new corporate financeclients are subject to a review by the New Business Committee. This committee considers, amongst other issues,the financial soundness of any client taken on.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses,represents the Company’s maximum exposure to credit risk without taking account of the value of any collateralobtained.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned byinternational credit rating agencies.

The table below summarises the Company’s exposure to credit risk by asset class according to whether theexposure is collateralised.

Exposure to Credit Risk30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Derivative financial assets Uncollateralised 496 622 1,139Market and client receivables Uncollateralised 45,607 28,188 17,396Unpaid share capital and loans due from staff Collateralised – 4 –Unpaid share capital and loans due from staff Uncollateralised 2 – 2Prepayments and accrued income Uncollateralised 1,573 1,897 1,244Other receivables Uncollateralised 595 768 707Cash and cash equivalents Uncollateralised 43,156 16,343 30,343

91,429 47,822 50,831

The table below summarises the Company’s exposure to credit risk by asset class according to credit rating.

Exposure to Credit Risk30 June 30 June 31 December2014 2013 2013

£ 000’s £ 000’s £ 000’s

Derivative financial assets Unrated 496 622 1,139Market and client receivables Unrated 24,413 18,672 11,404Market and client receivables AA- 14,915 9,516 5,102Market and client receivables A 4,089 – 556Market and client receivables A- 2,190 – –Market and client receivables BBB – – 334Unpaid share capital and loans due from staff Unrated 2 4 2Prepayments and accrued income Unrated 1,573 1,897 1,244Other receivables Unrated 595 768 707Cash and cash equivalents AA- 37,739 9,810 15,290Cash and cash equivalents A 5,417 6,533 15,053

91,429 47,822 50,831




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Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board. It has, however, delegated day-to-daymanagement to the Chief Executive Officer. The Company has in place an appropriate liquidity risk managementframework for its management of its short, medium and long-term funding and liquidity management requirements.The Company manages liquidity risk by maintaining adequate reserves, banking facilities, by continuouslymonitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Giventhe nature of the Company’s business, the Company does not run any material liquidity mismatches, financialliabilities are on the whole short-term and the Company has sufficient liquid assets to cover all of these liabilities.

Liquidity and interest risk tables

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial assets andliabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on theearliest date on which the Company is required to pay. The table includes both interest and principal cash flows.The tables also detail the Company’s expected maturity for its non-derivative financial assets. The tables belowhave been drawn up based on the undiscounted contractual maturities of the financial assets including interest thatwill be earned on those assets.

Liquidity and interest rate tableWeightedaverage Noeffective maturity Less than More thaninterest date 1 month 1 month Total

As at 30 June 2014 rates £ 000’s £ 000’s £ 000’s £ 000’s

Available-for-sale financial assets Non-interest bearing 1,000 – – 1,000

Financial assets at FVTPL Non-interest bearing 29,380 – 496 29,876Trade and other receivables Non-interest bearing – 47,777 – 47,777Financial liabilities at FVTPL Non-interest bearing – (3,915) – (3,915)Trade and other payables Non-interest bearing – (79,929) – (79,929)Cash and cash equivalents Variable interest rate instruments 0.60% – 5,330 – 5,331Cash and cash equivalents Variable interest rate instruments 0.30% – 87 – 87Cash and cash equivalents Variable interest rate instruments 0.25% – 37,739 – 37,738

29,380 7,089 496 36,965



24


Liquidity and interest risk tables continuedWeightedaverage Noeffective maturity Less than More thaninterest date 1 month 1 month Total

As at 30 June 2013 rates £ 000’s £ 000’s £ 000’s £ 000’s


Financial assets at FVTPL Non-interest bearing 9,522 440 182 10,144Trade and other receivables Non-interest bearing – 30,857 – 30,857Financial liabilities at FVTPL Non-interest bearing – (4,029) – (4,029)Trade and other payables Non-interest bearing – (33,451) – (33,451)Cash and cash equivalents Fixed interest rate instruments 1.00% – 2,750 – 2,750Cash and cash equivalents Variable interest rate instruments 0.30% – 3,750 – 3,750Cash and cash equivalents Variable interest rate instruments 0.25% – 9,843 – 9,843

9,522 10,160 182 19,864

Weightedaverage Noeffective maturity Less than More thaninterest date 1 month 1 month Total

As at 31 December 2013 rates £ 000’s £ 000’s £ 000’s £ 000’s


Financial assets at FVTPL Non-interest bearing 12,567 – 1,139 13,706Trade and other receivables Non-interest bearing – 19,349 – 19,349Financial liabilities at FVTPL Non-interest bearing – (4,289) – (4,289)Trade and other payables Non-interest bearing – (35,508) – (35,508)Cash and cash equivalents Variable interest rate instruments 1.00% – 3,284 – 3,284Cash and cash equivalents Variable interest rate instruments 0.30% – 11,768 – 11,768Cash and cash equivalents Variable interest rate instruments 0.25% – 15,290 – 15,290

12,567 9,894 1,139 23,600




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The carrying amounts of financial assets recorded at amortised cost in the financial statements approximate theirfair values.

Fair value hierarchy

All financial instruments carried at fair value are categorised in three categories, defined as follows:

Level 1 — Quoted market prices

Level 2 — Valuation techniques (market observable)

Level 3 — Valuation techniques (non-market observable)

As at 30 June 2014, the Company held the following financial instruments measured at fair value:

Level 1 Level 2 Level 3 TotalAs at 30 June 2014 £ 000’s £ 000’s £ 000’s £ 000’s

Available-for-sale financial assets – – 1,000 1,000

Financial assets at FVTPLDerivative financial assets – – 496 496Non-derivative financial assets held for trading 29,380 – – 29,380

29,380 – 496 29,876

29,380 – 1,496 30,876

Financial liabilities at FVTPLNon-derivative financial liabilities held for trading 3,915 – – 3,915

There were no transfers between Level 1, 2 and 3 during the period.

Level 1 Level 2 Level 3 TotalAs at 30 June 2013 £ 000’s £ 000’s £ 000’s £ 000’s


Financial assets at FVTPLDerivative financial assets – – 622 622Non-derivative financial assets held for trading 9,522 – – 9,522

9,522 – 622 10,144

9,522 – 1,622 11,144


There were no transfers between Level 1, 2 and 3 during the period.


14. Financial instruments continuedLevel 1 Level 2 Level 3 Total

As at 31 December 2013 £ 000’s £ 000’s £ 000’s £ 000’s


Financial assets at FVTPLDerivative financial assets – – 1,139 1,139Non-derivative financial assets held for trading 12,567 – – 12,567

12,567 – 1,139 13,706

12,567 – 2,219 14,786


There were no transfers between Level 1, 2 and 3 during the year.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Companydetermines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (basedon the lower level input that is significant to the fair value measurement as a whole) at the end of the reportingperiod.

Reconciliation of recurring fair value measurements categorised within Level 3 of the fair valuehierarchy

ShareUnlisted options andsecurities warrants Total£ 000’s £ 000’s £ 000’s

Opening balance 1 January 2014 1,080 1,139 2,219Share options and warrants exercised – (521) (521)Share options and warrants granted – 10 10Net unrealised loss recognised in income statement

relating to assets held at the end of the period – (132) (132)Unlisted securities redeemed (80) – (80)

Closing balance 30 June 2014 1,000 496 1,496

Level 3 financial instruments consist of derivative financial assets and unlisted shares received in lieu of fees.

The unlisted equity shares are carried as available-for-sale financial assets, classified as Level 3 within the fair valuehierarchy. A number of valuation techniques have been used to provide a range of possible values for thisshareholding in accordance with the International Private Equity and Venture Capital (“IPEV”) valuation guidelines.As the carrying value is within this range – and there have been no other factors brought to the Board’s attentionwhich would suggest that there has been an impairment – the carrying value has been maintained at £1 million.

The derivative financial assets are carried as financial assets at FVTPL classified as Level 3 within the fair valuehierarchy and comprise equity options and warrants over listed securities.



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Impact of reasonably possible alternative assumptions

The significant unobservable input used in the fair value measurement of Cenkos holdings of share options andwarrants is the volatility measure. Significant increases (decreases) in the volatility measure would result in asignificantly higher (lower) fair value measurement.

A sensitivity analysis based on a 10% increase / decrease in the volatility measure used as an input in the valuationof the share options and warrants shows the impact of such a movement would be an increase of £55,679 /decrease of £53,211 respectively the profit in the income statement.

Determination of fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date.

Financial instruments measured at fair value on an on-going basis include trading assets and liabilities and financialinvestments classified as available-for-sale.

Fair values are determined according to the following hierarchy:

(a) Level 1 – Quoted market price

Financial instruments with quoted prices for identical instruments in active markets.

(b) Level 2 – Valuation technique using observable inputs

Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical orsimilar instruments in inactive markets and financial instruments valued using models where all significant inputs areobservable.

(c) Level 3 – Valuation technique with significant non-observable inputs

Financial instruments valued using models where one or more significant inputs are not observable. The bestevidence of fair value is a quoted price in an actively traded market. In the event that the market for a financialinstrument is not active, a valuation technique is used. The majority of valuation techniques employ only observablemarket data and so the reliability of the fair value measurement is high. However, certain financial instruments arevalued on the basis of valuation techniques that feature one or more significant market inputs that are notobservable. For these instruments, the fair value derived is more judgemental. ‘Not observable’ in this contextmeans that there are few or no current market data available from which to determine the level at which an arm’slength transaction would be likely to occur. It generally does not mean that there is absolutely no market dataavailable upon which to base a determination of fair value (for example, historical data may be used). Furthermore,the assessment of hierarchy level is based on the lowest level of input that is significant to the fair value of thefinancial instrument.

The valuation models used where quoted market prices are not available incorporate certain assumptions that theCompany anticipates would be used by a third party market participant to establish fair value.

Fair valueat 30 June

2014£ 000’s Valuation Technique Unobservable input Range

Share options and warrants 496 Monte Carlo simulation Volatility 38-66%Unlisted securities 1,000 IPEV valuation guidelines n/a n/a

1,496


15. Related party transactions

Transactions with related parties are made at arm’s length. Transactions or balances between the Company and itssubsidiaries, which are related parties, have been eliminated on consolidation and, in accordance with IAS 24, arenot disclosed in this note. The Board includes all employees considered to be key management personnel.

30 June 30 June 31 December2014 2013 2013

£ 000's £ 000's £ 000's

Amounts owed by related partiesCenkos Nominees Limited 242 317 119

The compensation of the key management personnel of the Company (including the Directors) and their interests inthe shares and options over the shares of Cenkos Securities plc were as follows:


£ 000's £ 000's £ 000's

Aggregate emoluments 6,575 1,616 5,296

There were no Directors who were members of any Company pension scheme as at the period end (2013: none).

The Board (excluding the Chairman) have reviewed the Chairman’s remuneration arrangements to ensure that theyreflect his contribution to the Company. The executive Directors have proposed – and the Remuneration Committee(excluding the Chairman) has agreed – that a further £125,000 is to be paid in respect of the additional work heundertook in 2013.

Related party interests in ordinary shares of Cenkos Securities plc30 June 30 June 31 December2014 2013 2013No. No. No.

Number of shares 14,487,294 14,487,294 14,487,294Percentage interest 23% 23% 23%

Related party interests in share optionsSix months ended Six months ended Year ended

30 June 2014 30 June 2013 31 December 2013Number Weighted Number Weighted Number Weighted

average average averageexercise exercise exercise

price price price

Outstanding at beginningof the period 1,178,710 1.11 1,178,710 1.11 1,178,710 1.11

Lapsed during the period – – – – – –Exercised during the period – – – – – –Issued during the period – – – – – –

Outstanding at the end of theperiod 1,178,710 1.11 1,178,710 1.11 1,178,710 1.11

16. Events after the reporting period

There were no material events to report on that occurred between 30 June 2014 and the date at which theDirectors signed this Interim Report.



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29

Independent review report to Cenkos Securities plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 June 2014 which comprises the condensed consolidated income statement, thecondensed consolidated statement of comprehensive income, the condensed consolidated statement of financialposition, the condensed consolidated cash flow statement, the condensed consolidated statement of changes in equityand the related notes to the condensed consolidated financial statements 1 to 16. We have read the other informationcontained in the half yearly financial report and considered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on ReviewEngagements 2410 (UK and Ireland) “Review of Interim Financial Information Performed by the Independent Auditor ofthe Entity” issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors areresponsible for preparing the half-yearly financial report in accordance with International Accounting Standards 34,“Interim Financial Reporting,” as adopted by the European Union.

As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with IFRS asadopted by the European Union. The condensed set of financial statements included in this half-yearly financial reporthave been prepared in accordance with International Accounting Standards 34, “Interim Financial Reporting,” as adoptedby the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,“Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries,primarily of persons responsible for financial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted in accordance with International Standardson Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware ofall significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financialstatements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted by the European Union.

Ernst & Young LLP

Registered AuditorsLondon, United Kingdom

16 September 2014


Information for shareholders


30

Directors Gerry Aherne (Non-executive Chairman)Jeff Hewitt (Non-executive Director)Anthony Hotson (Non-executive Director)Mike Chilton (Finance Director)Jim Durkin (Chief Executive Officer)Paul Hodges (Executive Director)Joe Nally (Executive Director)Jeremy Warner Allen (Executive Director)

Company Secretary Stephen Doherty

Financial Calendar March Year end results announcedMay Annual General Meeting and final dividend paidSeptember Half year results announcedNovember Interim dividend paid

Company Registration 05210733, England & WalesNumber and Countryof Incorporation

Registered Office 6.7.8 Tokenhouse YardLondon EC2R 7AS

Bankers HSBCWest End Corporate Banking Centre70 Pall MallLondon SW1Y 5EZ

Solicitors Ashurst LLPBroadwalk House5 Appold StreetLondon EC2A 2HA

Travers Smith LLP10 Snow HillLondon EC1A 2AL

Auditors Ernst & Young LLP1 More London PlaceLondon SE1 2AF

Registrars Capita RegistrarsThe Registry34 Beckenham RoadBeckenham RoadKent BR3 4TU

Nominated Adviser and Broker Smith and Williamson Corporate Finance Limited25 MoorgateLondon EC2R 6AY

Website www.cenkos.com


Printed by Rubicon Corporate Print — 23813-01

17745 Cenkos Interim 2014:Layout 1 22/09/2014 16:25

Cenkos Securities plc

London6.7.8 Tokenhouse YardLondonEC2R 7ASTelephone: 020 7397 8900Fax: 020 7397 8901

Edinburgh3rd Floor66 Hanover StreetEdinburghEH2 1ELTelephone: 0131 220 6939Fax: 0131 220 2051

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