Fiske : Annual Report and Accounts for the 13 months ended 30 June 2022

Annual Report and Accounts

For the period ended 30 June 2022

0

Contents

	Page
Chairman's and Chief Executive's Report	2
Strategic Report	5
Directors' Report	8
Corporate Governance Statement	10
Directors' Responsibilities Statement	17
Independent Auditor's Report to the Members of Fiske plc	18
Consolidated Statement of Total Comprehensive Income	27
Consolidated Statement of Financial Position	28
Parent Company Statement of Financial Position	29
Group Statement of Changes in Equity	30
Parent Company Statement of Changes in Equity	31
Group and Parent Company Statement of Cash Flows	32
Notes to the Accounts	33
Company Information	56
Notice of Annual General Meeting	57
Notes to Notice of Annual General Meeting	59

1

Chairman's and Chief Executive's Report

Trading and revenues

Equity market returns were positive in the latter part of 2021, however it became clear in 2022 that much of the global economy had to contend with yet further supply chain disruption as consumers were released from their Covid restraints. This when coupled with higher commodity and energy prices and exacerbated by the war in Ukraine led to a steep sell-off in global indices. The performance of stock markets across the world has been very variable. In the UK, having remained lowly rated, indices have held up relatively well.

For Fiske, the average monthly commissions were down by some 16% as the market conditions led to a lower level of trading activity. However, our monthly management fee revenue has been more resilient moving up by nearly 1% on an average monthly basis.

Change of financial year-end

Note that during the period, the Company changed its financial year end from May 31 to June 30. Reported revenue and expense items in this financial period to 30 June 2022 thus relate to 13 months of operations, whilst prior year comparatives to 31 May 2021, relate to 12 months.

Costs

Staff costs amount to some 59% of total costs (2021: 58%). During the period, efficiencies and more automation have meant that at 30 June 2022, we employed two fewer staff in settlement and administration, and meanwhile employed two more staff in fee-earning, client facing roles compared to May 2021. Nevertheless, total staff costs have increased.

At the end of November 2021, we moved to new offices at 100 Wood Street after spending some 45 years at Salisbury House. The relocation gave rise to overlap premises costs including rent, rates, service charges, dilapidation charges and utilities for a period of just over three months which amounted to some £181,000. We now enjoy lower overall property costs and benefit from more modern offices.

Operating expenses rose to £6.3m in the 13-month period to 30 June 2022 (12 months to May 2021: £5.7m); overall, the increase in the monthly run rate held to just under 2%.

Outturn

The Group made a pre-tax loss of £349,000 in the year. The cash flow arising from this is better by some £218,000 that is set aside annually for amortisation or impairment of goodwill or customer bases arising from past acquisitions.

Euroclear

Euroclear's operating income increased from €1,479M to €1,572M and its business income margin increased from 33% in 2020 to 37% in the year to December 2021. Their operating margin was stable at 40% in 2021 and net earnings per share increased to €146.9 in 2021 compared to €137.2 in 2020.

There were several private transactions in Euroclear shares during the year and these have helped us to better assess the appropriate carrying value of our holding in our financial statements. Considering recent transaction prices in Euroclear shares, we have marked the carrying value of our investment up to €2,050 per share (2021: €1,600 per share) being £4.6m in total. This continues to represent a significant store of value on our balance sheet and the company paid us gross dividends amounting to €185,000 in the period.

Fiske plc

Page

2

Chairman's and Chief Executive's Report (continued)

Restatement of accounts

Following an internal review of the results in preparations for reporting the first half of the period, the Directors of the Company determined that certain one-off adjustments needed to be made to its accounts for the prior financial period. The prior period adjustment relates to the method of computation of accrued management fee revenue. It was discovered that incorrect dates had been used to calculate accrued revenue for a number of clients which meant revenue was recognised when it should not have been. There has been no impact on the client money or asset positions of our clients, and no impact on the Company's cash position. As a consequence of correcting this error group revenues for the year to May 2021 have reduced by £244k, trade and other receivables as at 31 May 2021 have reduced by £303k and retained earnings brought forward for the year ended 31 May 2021 have reduced by £59k. Comparative data in this report has been restated and the adjustments elaborated in notes to the accounts and the comments in this statement reflect these changes.

Net assets

Shareholder's funds amount to some £8.3m (2021: £7.8m) and within this we now hold some £3.2m (2021: £3.5m) of cash.

Dividend

The Board has resolved not to pay a dividend for the period to 30 June 2022 (2021: £nil).

Impact of Covid-19

The impact of Covid-19 on our operations is very minimal. What is more important is the impact on the global economy as the world recovers from Covid-19, and how changing demand patterns have caused supply-chain and commodity shortage difficulties.

Staff

We would like to thank all members of staff for their continued commitment and perseverance. As a Company we have worked very effectively in both an entirely remote manner as well as adapting quickly to a hybrid model when we were able to access our offices again.

Board

Fiske was founded a little over forty-nine years ago in August 1973 such that we are now well into our 50th year of trading. In August 2023 we will celebrate our 50th anniversary and as your Founder and Chairman I have decided that this is an appropriate moment to hand over the reins. Accordingly, I will be stepping down as Chairman at the conclusion of the Annual General Meeting in November 2023 and handing over my investment management responsibilities for clients during the coming year. In anticipation of this change the Board will appoint Tony Pattison as Deputy Chairman from the conclusion of our Annual General Meeting ('AGM') this year. Tony is a former Chairman of Capital Gearing Trust plc and was the Chairman of Fieldings Investment Management at the time of our acquisition of this company in July 2017. Tony has been a director of the Company since 1 October 2018 and will be proposed as the new Chairman at our AGM in November 2023. He and I will work together during this year of transition to ensure a smooth handover of my clients and the responsibilities of the Chairman.

Strategy

We continue to implement our ongoing strategy to welcome new investment managers with established client relationships to increase our assets under management and advice. We believe that with our traditional values, modern systems and up to date regulatory framework we provide an attractive place to work for aspiring, independently minded private client investment managers.

During the year we have refreshed our brand and completely redeveloped our website to show-case our customer offerings and to better communicate the experience of being a client of, or member of staff at Fiske.

Fiske plc

Page

3

Chairman's and Chief Executive's Report (continued)

Markets

The inflationary pressures that we expressed concern about in our half yearly report to shareholders have become solidly entrenched. Not since the 1970's and 80's has inflation reached the levels we are now seeing; the July CPI for year-on-year inflation in the UK hit 10.6% and the Bank of England is forecasting that this will rise further in the near term.

In addition to trying to control inflation with interest rate rises central banks are also reigning in, or planning to, the financial support provided to keep economies functioning during Covid. The actions being taken are leading to expectations of economic recession. Indeed, as Jerome Powell, Chairman of the US Federal Reserve Bank, reiterated at the Jackson Hole Symposium in August, controlling prices is the main objective even if it puts growth at risk.

Over our thirteen-month period in review the first half was relatively positive, though the gains were mostly given back in the second half as the world became increasingly aware of the looming problems of inflation which would bring to an end the unusually protracted period of near zero interest rates. Then in February the inflation problem was made even worse by the Russian invasion of Ukraine which led to a sharp rise in commodity prices especially oil & gas and in food. Central Banks rather belatedly began to raise interest rates and are likely to continue doing so well into next year. The war in Ukraine shows no sign of ending soon and inflation has yet to peak and so the economic outlook is one of significant uncertainty and the markets are reacting predictably. Whilst the United States is much better placed for the inflationary pressures in energy and food, Wall Street is vulnerable because the speculative excesses have been so prevalent there. The other main driver of world economies has been the emergence of China as the fastest growing major economy, but that has come to a sharp halt and the outlook has changed radically.

Outlook

The first few months have seen softer trading volumes, in line with more traditional summer levels. However, portfolio values have generally held up despite market gyrations which is positive for our fee revenues. We expect to benefit more fully from the operational cost reductions made last year.

We are in a period of considerable economic uncertainty and that is likely to prevail well into next year. World stock markets have yet to fully recognise the problems and to adjust. This could prove painful.

Annual General Meeting

We do believe that most shareholders would now be comfortable with an in-person meeting. We would like to invite our shareholders to attend the Annual General Meeting to be held at our new offices at 100 Wood Street, London EC2V 7AN at 12.30 pm on Thursday 24 November 2022. We would like the opportunity to meet you and for you to meet the management of the Company in which you are invested and see our new offices.

The Board encourages shareholders to submit their votes via the CREST system. Shareholders may also submit questions in advance of the AGM to the Company Secretary via email to [e-mail] by post to the Company Secretary at the address set out on page 56 of this report.

Clive Fiske Harrison	James P Q Harrison
Chairman	Chief Executive Officer

19 October 2022

Fiske plc

Page

4