Final Results

1.  Principal accounting policies

The financial information set out in this announcement has been prepared in accordance with the recognition and measurement principles of IFRS as endorsed for use in the European Union.

The financial information set out in this announcement does not constitute the group’s statutory accounts for the year ended 30 November 2010 or the year ended 30 November 2009 under the meaning of s434 Companies Act 2006, but is derived from the 2010 annual report and accounts.

Statutory accounts for the years ended 30 November 2009 and 30 November 2010 have been reported on by the Independent Auditors.

The Independent Auditors’ Report on the Annual Report and Financial Statements for years ended 30 November 2009 and 30 November 2010 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

Statutory accounts for the year ended 30 November 2009 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 November 20010 will be delivered to the Registrar in due course.

2.  Segment information

IFRS 8 requires indication of operating segments on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker (‘CODM’) in order to allocate resources to the segment and assess its performance.  The CODM has been determined to be the Executive and Non-Executive Directors, as they are principally responsible for evaluating operating segment performance and deciding how to allocate resources to operating segments.

The Group has four main operating divisions; Private Clients, Wealth Management, Capital Markets and Secondary Trading.  These four segments represent the Group’s reportable segments under IFRS8. 

The Private Clients division offers investment management and stockbroking advice and services to individuals.  Wealth Management contains our Independent Financial Advisory (“IFA”) business, giving advice on and acting as intermediary for a range of financial products.  The Capital Markets division provides corporate finance and corporate broking advice and services to companies and acts as Nominated Advisor to clients listed on the Alternative Investment Market (“AIM”).  Secondary Trading contains our Institutional Sales and Research business, which carries out stockbroking activities on behalf of companies as well as conducting research into markets of interest to its clients.  Each reportable segment has a segment manager who is directly accountable to and maintains regular contact with the CODM.  The Head Office segment comprises centrally incurred costs and revenues.

Previously segments were determined and presented in accordance with IAS 14 ‘Segment Reporting’.  The Group’s primary format for reporting segment information was business segments, but reporting was also categorised by geographic location, due to a subsidiary located in Australia.  During the prior year however, the shareholding in this subsidiary was substantially reduced, to the point at which it became classified as an associate and is no longer separately reported, therefore is not included in the following tables.  As the Group’s only location is now the UK, geographic reporting is no longer necessary. Comparative information has been restated to reflect the new segments.  No customer represents more than ten percent of the Group’s revenue.

The following tables represent revenue and profit information for the Group’s business segments.

Impairment losses on goodwill of £74k can be allocated to the Private Clients segment and is included in the segment result above.

Impairment losses on goodwill of £74k and £162k can be allocated to the Private Clients and Wealth Management segments respectively, and are included in the segment results above.

Segment assets and segment liabilities are reviewed by the CODM in a consolidated statement of financial position.  Accordingly this information is replicated in the Group Consolidated Statement of Financial Position.  As no measure of assets of liabilities for individual segments is reviewed regularly by the CODM, no disclosure of total assets or liabilities has been made, in accordance with the amendment to paragraph 23 of IFRS 8.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

3.  Taxation

The tax credit for the year and the amount calculated by applying the standard United Kingdom corporation tax rate of 28% (2009: 27.97%) to profit before taxation can be reconciled as follows:

4.  Earnings per share (EPS)

Basic EPS is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.

Diluted EPS is the basic EPS, adjusted for the effect of the conversion into fully paid shares of the weighted average number of all employee share options outstanding during the year.  Options over 527,855 (2009: 813,963) shares are excluded from the EPS calculation as they are antidilutive.  Antidilutive options represent options issued where the exercise price is greater than the average market price for the period.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:

5.  Investments

Available-for-sale investments, include equity investments other than those equity investments which form part of the carried interest bonus scheme and investments in subsidiaries. Available-for-sale investments are measured at fair value with fair value gains and losses recognised directly in equity in the available-for-sale reserve.

Other investments, in the main, comprise financial assets designated as fair value through profit or loss and include equity investments which form part of the carried interest bonus scheme. Financial assets designated as ‘fair value through profit or loss’ are measured at fair value with fair value gains and losses recognised directly in the income statement.

Warrants are acquired as part of the carried interest bonus scheme and designated as fair value through profit or loss.  There is no cash consideration associated with the acquisition.

Fair value, in the case of quoted investments, represents the bid price at the balance sheet date.  In the case of unquoted investments, the fair value is estimated by reference to recent arm’s length transactions.  The fair value of warrants is estimated using established valuation models.

6.  Cash, cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits with banks and financial institutions with a maturity of up to three months and bank overdrafts repayable on demand.

Cash and cash equivalents represent the Group’s money and money held for settlement of outstanding transactions.

Free money held in trust on behalf of clients is not included in the balance sheet.  Free money at 30 November 2010 for the Group was £85,429k (2009: £93,457k).