Annual Financial Report and Notice of AGM

6 March 2015

Daniel Stewart Securities plc ("Daniel Stewart" or "the Company")

ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2014 ("Annual Report") and NOTICE OF AGM

The Board of Daniel Stewart, the investment bank offering corporate advisory, institutional stockbroking and wealth management services, announces its audited financial statements for the year ended 31 March 2014.

The Annual Report , together with a notice of Annual General Meeting, to be held at 10.30 a.m. on 8 April 2015 at the Company's offices, Becket House, 36 Old Jewry, London EC2R 8DD, are being published today and will be available to view at www.danielstewart.co.uk. A further announcement in relation to the lifting of suspension in the Company's shares is expected shortly.

The audited financial statements differ in the following material respect from the unaudited results, notified on 22 December 2014:

- loss and total comprehensive expense for the year for 2014 increased by £72,819 due to the review of accounts receivable after 22 December 2014, and

- an increase in net assets of £102,615 in respect of the following:

The audit report includes a statement "Emphasis of matter - Going concern", drawing attention to the disclosures relating to going concern in the financial statement. It should be noted that this does not comprise a qualification of the financial statements and that subsequent to the period end, on 29 January 2015 the Company announced the terms of a fundraising strengthen the Company's balance sheet for regulatory capital purposes.

Enquiries:

DANIEL STEWART SECURITIES PLC Tel: 020 7776 6550

Peter Shea

WESTHOUSE SECURITIES Tel: 020 7601 6100

Richard Johnson / Martin Davison

Notes to Editors:

About Daniel Stewart

Daniel Stewart Securities is an AIM-listed company providing a range of investment banking services to Small Cap publicly traded and non-publicly traded companies. The Group has two subsidiaries, Daniel Stewart and Company, the Group's principal operating subsidiary, which is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange, and Daniel Stewart Capital, the Group's leasing and debt financing division.

Strategic Report

This review contains several subjective and forward looking statements which have been made by the directors in good faith based upon the information available to them at the time. Any subjective or forward-looking statement should be considered by the user within the context of economic and business risk.

Financial review

The year to March 2014 has continued to be difficult, although market conditions did improve marginally during the second half of the financial year. Revenue has decreased year on year in our traditional corporate finance areas, however our private client desk has demonstrated continued growth. This is the first year in which the group can demonstrate full year saving from a reorganisation in September 2012; accordingly overall costs have reduced significantly. We will continue to keep our cost-base under constant review and appropriate to the Group's business activities.

Revenue for the twelve months was £4.2 million, down from £4.8 million for the previous year, a decrease of 12.0% as compared to the 45.3% deterioration in the previous-year. Our Corporate Finance and Capital Markets saw a decline for the year of £1.0 million: this was offset by the completion of a number of vendor placings totalling £32.0 million as compared to £27.5 million in the year ended 31 March 2013. Our private client activities improved by 19%. At the gross profit level, performance was up from £0.3 million in 2013 to £1.3 million. This has been helped by a round of cost reductions initiated in September 2012, lowering our cost of sales by £1.5 million from the year ended 31 March 2013. The group continues to divest itself of certain investments, in order to realise cash; these sales resulting in a loss in the year ended 31 March 2013 of £0.4million and a loss of £65k in the year under review. At the operating level, before impairment of Goodwill, we reported a loss of £1.4 million compared to a loss of £2.6 million for 2013. Administrative costs continued to reduce in the year under review by a further £0.3million (2013: £1.2 million reduction). Staffing levels have continued to decline from 39 during the previous year to 32 at 31 March 2014 and currently stand at 26. Included in staff costs are £390,000 of non-contractual retention payments.

At 31 March 2014 we acted for 27 public market corporate clients as compared to 41 clients a year earlier. Much of this decline has been due to client companies ceasing to trade or de-listing.

Assets under administration were £197 million at 31 March 2014, down from £300 million in 2013, due significantly to the decline in the value of one holding in the portfolio.

Business in the Far East has not grown sufficiently for the group to continue seeking licence approval. We continue to retain clients in that geographical region however, and have maintained institutional links through membership of Global Alliance Partners. Daniel Stewart Securities plc now has board representation of this organisation.

Current trading and outlook

In the first half (April to September 2014) the group continued to reduce losses, with turnover rising to £2.3 million as compared to £2.1 million for the same period in the previous year. Operating costs for these first six months were £2.3 million (2013: £2.8 million) resulting in a small operating profit.

Principal risks and uncertainties

The principal risk facing the business is the condition of the Stock Market. Adverse market conditions normally have a significant downward effect upon revenue and hence profitability. The group mitigates some of this risk by targeting revenues across a number of sectors and by control of overheads.

The other main risks facing the group are operational, credit, liquidity and to a lesser degree interest and currency rates.

Peter Shea

5 March 2015

Directors' Report

The Directors have pleasure in presenting their report and the consolidated financial statements for the year to 31 March 2014.

Risk Management Framework

Chief Executive Officer

The Chief Executive Officer is responsible for ensuring requirements of the FCA and of other supervisory and regulatory bodies are duly fulfilled and the Board is informed accordingly.

The Chief Executive Officer has responsibility for ensuring that management maintain an effective system of risk management and internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. Accordingly he will oversee that:

· compliance of established control measures is maintained; that the Group maintains the required levels of liquidity and profitably; that adequate provisions are made.

· appropriate systems and procedures be applied, ensuring they contain the required internal control measures.

The Group Board of Directors

The Group Board is responsible for approving all risk management policies and for determining the overall risk appetite for the Group. The Group Board receives a quarterly financial report detailing key credit risk exposures, operational risk incidents and losses. Key credit risks are considered by the senior management on a formal basis weekly and are subject to continuous rolling scrutiny. The Group Board monitor and assess all types of risk within the Group to ensure that internal controls are properly established so that the Group's risk exposure is maintained within the internally evaluated parameters.

Audit committee

The Audit Committee, consisting of all the non-executive directors, has the following responsibilities:

· monitoring of the Group's internal control environment

· assessment of the Group's financial risks

· review of the Group's financial statements, reports and announcements and the accounting policies that underlie them.

· recommendation to the board on the appointment and remuneration of the external auditors

· monitoring of the independence of the external auditors and the establishment of a policy for the use of the auditors for non-audit work.

Other directors, members of staff and the external auditors are invited to attend these meetings, as appropriate. The committee reviews the scope and results of the external audit, its cost effectiveness and the independence and objectivity of the external auditors. The Group Board monitor and assess all types of risk within the Group and ensure that internal controls are properly established so that the Group's risk exposure is maintained within the internally evaluated parameters.

Compliance

The Compliance Officer is responsible for compliance oversight in performing the compliance officer role for the Group, including:

· Assisting management in identifying and controlling compliance risk.

· Monitoring changes in business practices and products to ensure that compliance procedures and controls are adequate to cover them.

· Monitoring and checking for adherence to compliance procedures and controls.

· Assessing the compliance risk of services including the intended controls/procedures to contain that risk prior to sign-off.

· Reporting to the CEO any material and significant breaches or potential breaches of regulations that come to light.

These responsibilities are carried out as specified in note 4 to the financial statements.

Directors' Interests in Ordinary Shares of Daniel Stewart Securities Plc

The directors of the company in office at the year- end had beneficial interests in the ordinary share capital of the company as shown below:

Directors

The directors of the company who were in office during the year and up to the date of signing the financial statements were as follows:

Directors' emoluments

Pension contributions of £4,284 (2013: £8,892) were made on behalf of Peter Shea during the year.

Non current assets

The movement on non-current assets during the year is disclosed in notes 12-16 of the financial statements.

Dividend

The directors do not recommend the payment of a dividend. (2013:£nil)

Significant shareholdings

In addition to the directors, the company has been informed of the following shareholdings of over 3% in the company's issued ordinary share capital as of 31 December 2014:

Going Concern

The directors have prepared the financial statements on the going concern basis and the reason for this is detailed in the Corporate Governance Statement on pages 10 and 11.

Share Capital

Details of changes to the share capital of the company are reported in note 19 of the financial statements.

Employee Benefit trust

At 31 March 2014 The Old Jewry Employee Benefit Trust held 30,340,950: (2013: 30,340,950) Daniel Stewart Securities Plc ordinary shares.

Employment policy

The group is an equal opportunities employer.

Directors' Interests in Share Options

The following directors had interests in options over ordinary shares of the company as shown below:

Directors' and officers' insurance

The Company purchased and maintained throughout the financial year Directors' and Officers' liability insurance in respect of itself and its Directors as permitted by the Companies Act 2006.

Post balance sheet events

On 1 October 2014 the Company announced that it was not able to publish its Annual Report for the year ended 31 March 2014. As a consequence, and pursuant to the AIM Rules for Companies, the Company's shares were temporarily suspended.

During the final stages of preparation of the Accounts, the Company identified a shortfall in its regulatory capital, under the European Capital Requirements Regulations and Directive CRR/CRD IV. Daniel Stewart Securities plc entered into discussions with potential investors in order to strengthen the Company's balance sheet for regulatory capital purposes.

On 6 November 2014 Daniel Stewart Securities plc announced that as a result of a General meeting the company had authority to issue and allot 380,000,000 new Ordinary Shares and to disapply of pre-emption rights.

 On 12 December Daniel Stewart & Co plc relinquished its Nomad licence.

 On 29 January 2015, Daniel Stewart Securities plc announced that the company had received cash subscriptions for 111,000,000 new shares and a Non-redeemable callable bond to raise £1.22million. Further to this Peter Shea was to acquire and convert a loan providing a further £0.3million

Cash Subscription

The Group has raised £440,000 through the subscription by institutional and other investors for 111,000,000 new ordinary shares of 0.25p each in the Company at 0.4p per new Share, representing a 12.5% premium to the Company's closing price on 30 September 2014, being the last day prior to suspension of the Company's Shares.

The group has raised a further £780 000 through subscription by Epsilon Investments PTE Limited (EIL), a Company registered in Singapore and controlled by Zainab Binte Mohamed Omar, to a Non-redeemable callable bond. The Bond confers on the bondholder the right to subscribe for 194,000,000 new Shares upon payment of a further £1,000, equating to a cost of 0.4p per new Share. Conversion of the Bond by EIL is subject to EIL receiving Financial Conduct Authority ("FCA") controller status, following which EIL shall promptly exercise the Bond. Upon conversion of the Bond EIL shall hold an interest in approximately 29.39% of the Company's Shares as enlarged by the full Refinancing.

Loan Conversion and Director Dealings

On 28 January 2015 Peter Shea, Chairman and Chief Executive purchased and converted a loan comprising £225,000 principal, together with rolled up interest of £75,000 at a conversion rate of 0.4p per Share (the "Loan Conversion"). As a result, 75,000,000 new Shares were issued to Mr Shea, following which he was interested in 154,338,874 Shares, representing approximately 17.15% of the Company's Shares as enlarged by the subscription described in this Directors' report.

Statement of Directors' Responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the group for that year. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company and the group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of disclosure of information to auditors

Each of the persons who is a director at the date of approval of this report confirms that:

So far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

During the year Keelings Limited resigned as auditors and the directors appointed PricewaterhouseCoopers LLP auditors in June 2014. PricewaterhouseCoopers LLP have expressed their willingness to continue in office as auditors and a resolution to re-appoint them will be proposed at the forthcoming annual general meeting.

By order of the board

John Whitwell

Company Secretary

5 March 2015

Corporate Governance

Companies traded on AIM are not required to adopt the Combined Code. However, the Directors of Daniel Stewart Securities Plc are committed to the application of requirements under the Code, where they are considered to be appropriate.

Board of Directors

The Board of Directors is responsible for corporate governance.

The Board of Directors consists of one executive and two non-executive directors. The non-executive directors' role is to bring independent judgement to board discussions and decisions.

The Board of Directors is composed as follows:

Peter Dicks - Senior Independent Director (Non executive)

Peter Shea - Chairman & Chief Executive Officer

Stuart Lucas - Non Executive Director

The Board meets regularly throughout the year. The Board reviews financial performance, regulatory compliance and will consider any matters of significance to the group including corporate activity.

Remuneration Committee

The Remuneration Committee comprises the non-executive directors. The committee provides independent review of the executive director's remuneration and the group remuneration policy. It makes its decisions in consultation with the Chief Executive Officer. No director plays a part in any decision about their own remuneration. This committee also reviews bonus and equity arrangements for the group's other senior employees.

Audit Committee

The Audit Committee, which comprises the non-executive directors, has the following responsibilities:

· monitoring of the group internal control environment;

· assessment of the group financial risks;

· reviewing the group financial statements, reports and announcements and the accounting policies that underlie them;

· recommendation to the Board on the appointment and remuneration of the external auditors;

· monitoring of the independence of the external auditors and the establishment of a policy for the use of the auditors for non-audit work.

· Other directors, members of staff and the external auditors are invited to attend these meetings, as appropriate. The committee reviews the scope and results of the external audit, its cost effectiveness and the independence and objectivity of the external auditors.

Internal financial control

The Directors are responsible for ensuring that the group's system of internal control enables them to report financial information with reasonable accuracy and safeguard the assets of the group. At the time of approving the financial statements the directors found the financial control system to be appropriate for a group of this nature and size. The key elements of this system are described below:

Defined procedures

Major and recurrent transactions are carried out in accordance with defined procedure.

Organisational structure

The Group structure is documented and understood. Individual responsibilities and performance are defined and monitored.

Risk management

The Directors have responsibility for identification and management of the business risks facing the group. Significant areas of business risk are identified and the management approach is defined and controlled through adoption of key control objectives.

Corporate Governance

Information systems

The Board receives reports from management on the Group's performance on at least a quarterly basis and actual results are compared with budget on a monthly basis. Variances from budget are analysed and reviewed. Updated forecasts are also provided on a monthly basis.

The forecasts are based on various assumptions regarding expected levels of income and cost. They stress test the basic assumptions regarding income and cash levels taking into account pipeline activity, new business initiatives and the company's performance-related remuneration policy.

Going concern

The Group has again experienced losses in the year to March 2014 which inevitably have put pressure on the finances of the Group, to which senior management have reacted accordingly.

The group's 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 have been considered by the directors, taking account of the current market conditions which in the opinion of the directors demonstrate that the company shall be able to continue to operate within its own resources.

The forecasts used for this exercise are based on various assumptions regarding expected levels of income and cost. Further equity of £1.52million was issued on 29 January 2015. Transaction related income is based, with reasonable expectation, on the mandated or identified potential customers in the pipeline, and seasonal historic expectation. Retainer income is projected at the current mandated level with no growth assumed in the year ended 31 March 2015. Income projections have been stress tested, taking into account the failure of specific identified transactions. One or more of these failures may have an impact on the Group's ability to continue as a going concern without recourse to additional external finance. Senior management are monitoring progress of these significant transactions daily and are actively pursuing further transactions in addition to those included in the forecast.

In September 2012 the Group restructured removing approximately £1million per annum from its cost base. These benefits have been fully reflected in recent performance as well as forecasts underpinning the going concern assessment. The Group has assumed a moderate increase in the cost base for the foreseeable future. Not-withstanding the above, the Group is expected to maintain acceptable cash and regulatory capital levels for the foreseeable future.

As a result the directors believe that the group will be able to manage its business risks successfully, and that the group has adequate resources to continue in operational existence for the foreseeable future. The directors consider it appropriate to adopt the going concern basis in preparing the Annual Report and Financial statements, although they consider that the conditions described above indicate the existence of a material uncertainty which may cast significant doubt about the group's and company's abilities to continue as a going concern.

Independent auditors' report to the members of Daniel Stewart Securities PLC

Report on the financial statements

Our opinion

In our opinion:

· the financial statements, defined below, give a true and fair view of the state of the group's and of the company's affairs as at 31 March 2014 and of the group's loss and the group's and the company's cash flows for the year then ended;

· the group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union;

· the company financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

This opinion is to be read in the context of what we say in the remainder of this report.

Emphasis of matter Going concern

In forming our opinion on the group and company financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the group and company's ability to continue as a going concern. The group and company incurred a net loss of £2,406,358 and £3,800,339 respectively during the year ended 31 March 2014 and the going concern status of the group and company is dependent on the group and company being able to achieve management income forecasts or otherwise the raising of external finance in the short to medium term. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group and company's ability to continue as a going concern. The group and company financial statements do not include the adjustments that would result if the group and company were unable to continue as a going concern.

What we have audited

The group financial statements and company financial statements (the "financial statements"), which are prepared by Daniel Stewart Securities PLC comprise:

· the consolidated and company statements of financial position as at 31 March 2014;

· the consolidated statement of comprehensive income for the year then ended;

· the consolidated and company statements of cash flow for the year then ended;

· the consolidated and company statements of changes in equity for the year then ended;

· the accounting policies; and

· the notes to the financial statements, which include other explanatory information.

The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union and, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.

What an audit of financial statements involves

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) ("ISAs (UK & Ireland)"). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

· whether the accounting policies are appropriate to the group's and the company's circumstances and have been consistently applied and adequately disclosed;

· the reasonableness of significant accounting estimates made by the directors; and

· the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report and Financial statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Other matters on which we are required to report by exception

Adequacy of accounting records and information and explanations received

Under the Companies Act 2006 we are required to report to you if, in our opinion:

· we have not received all the information and explanations we require for our audit; or

· adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or

· the company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors' remuneration

Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 9, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Darren Meek (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

5 March 2015

Consolidated Statement of Comprehensive Income

Year ended 31 March 2014

Consolidated Statement of Financial Position

As at 31 March 2014

The financial statements on pages 15 to 41 were approved by the Board of Directors on 5 March 2015 and signed on its behalf by:

Peter Shea

Chairman and Group Chief Executive

5 March 2015

Company Statement of Financial Position

As at 31 March 2014

The financial statements on pages 15 to 41 were approved by the Board of Directors and authorised for issue on 5 March 2015. They were signed on its behalf by:

Peter Shea

Chairman and Group Chief Executive

5 March 2015

Consolidated and company Statement of Changes in Equity

Year ended 31 March 2014

Consolidated Statement of Cash Flows

Year ended 31 March 2014

Company Statement of Cash Flows

Year ended 31 March 2014

Notes to the Financial Statements

1. Accounting policies

General information

Daniel Stewart Securities Plc is a company incorporated and domiciled in the United Kingdom and is the ultimate parent company of the group. The group's principal activities are the provision of financial advice to companies and broking in financial instruments.

These financial statements are prepared and presented in pounds sterling because that is the currency of the primary economic environment in which the group operates.

Basis of accounting

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs as adopted and endorsed by the EU), IFRS IC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared on the historical cost basis as modified by the valuation of certain financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss, as described below. The principal accounting policies adopted are set out below.

Basis of preparation

The group has taken advantage of the exemption in section 408 of the Companies Act 2006 from publishing the parent's own statement of comprehensive income.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries) made up to 31 March 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.

No income statement is presented for the company as provided by the Companies Act 2006.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Financial risk management objectives and policies

The group's principal financial assets are cash and cash equivalents, trade and other loans and receivables and investments. The group's credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are net of allowances for impairment of receivables. The group's principal financial liabilities are in respect of loans, trade payables, taxation and leases.

Expect as described below, the same accounting policies, presentation and methods of estimation are followed in these financial statements as applied in the Group's financial statements for the year ended 31 March 2013.

New and amended standards effective in this financial year

Amendment to IAS 12,'Income taxes' on deferred tax (effective 1 January 2012) (endorsed 1 January 2013)

Amendment to IAS 1,'Presentation of financial statements' on OCI (effective 1 July 2012)

IFRS 13, 'Fair value measurement' (effective 1 January 2013)

IAS 19 (revised 2011) 'Employee benefits' (effective 1 January 2013)

Amendment to IFRS 1 on hyperinflation and fixed dates (effective 1 July 2011) (endorsed 1 January 2013)

Amendment to IFRS 1,'First time adoption' on government grants (effective 1 January 2013)

Amendments to IFRS 7 on Financial instruments asset and liability offsetting (effective 1 January 2013)

Annual improvements 2011 (effective 1 January 2013)

IFRIC 20 'Stripping costs in the production phase of a surface mine' (effective 1 January 2013)

Other than as noted the new standards have not had any material impact on the financial statements

Restatement

A number of restatements have occurred following re- amendment of the application of certain accounting policies and in order to address errors identified in the 2013 financial statements. These are summarised below:

Group and Company

A revaluation reserve of (£1,150,000) was found to no longer be required and was accordingly re-allocated against the accumulated deficit.

This has no net impact on income or net assets for either period presented.

Balances held with the Group's broker, Jarvis, have now been presented within Trade Receivables. These had previously been recorded within cash and cash equivalents. This had no net impact on income or net assets for either period presented.

Group

The Group has consolidated the Trusts, established and maintained for the purposes of administering the Group's employee share benefit arrangements. The primary effect of this has been to give recognition to certain loans made to directors, and related tax liabilities. The shares in the Group held by Trusts had previously been reflected in the financial statements, within the Employee Benefit Trust reserve but at par value rather than cost. The amounts have been corrected so that the full cost is shown in the reserve analysis.

This had no impact on income for either period presented, however net assets have increased by £109,764 in the year ended 31 March 2014 as a result of these adjustments.

Company

The company has removed, from its entity financial statements, the consolidating entries recorded in relation to the Trusts referred to above. This had no impact on income or net assets for either period presented.

Adoption of new IFRS requirements

The Group has adopted IFRS13, and while there has been no material change to income or net assets, financial instrument valuations have been categorised according to the hierarchy introduced.

Going Concern

The Group has again experienced losses in the year which inevitably have put pressure on the finances of the Group, to which senior management have reacted accordingly.

The group's 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 have been considered by the directors, taking account of the current market conditions which in the opinion of the directors demonstrate that the company shall be able to continue to operate within its own resources.

The forecasts used for this exercise are based on various assumptions regarding expected levels of income and cost. Further equity of £1.52million was issued on 29 January 2015. Transaction related income is based, with reasonable expectation, on the mandated or identified potential customers in the pipeline, and seasonal historic expectation. Retainer income is projected at the current mandated level. Income projections have been stress tested, taking into account the failure or delay of specific identified transactions. One or more of these failures may have an impact on the Group's ability to continue as a going concern without recourse to additional external finance. Senior management are monitoring progress of these significant transactions daily and are actively pursuing further transactions in addition to those included in the forecast.

In September 2012 the Group restructured removing approximately £1million per annum from its cost base. These benefits have been fully reflected in the year ended 31 March 2015. The Group has assumed a moderate increase in the cost base for the foreseeable future. Not-withstanding the above, the Group is expected to maintain acceptable cash and regulatory capital levels for the foreseeable future.

As a result the directors believe that the group will be able to manage its business risks successfully, and that the group has adequate resources to continue in operational existence for the foreseeable future. The directors therefore consider it appropriate to adopt the going concern basis in preparing the Annual Report and Financial statements, although they consider that the conditions described above indicate the existence of a material uncertainty which may cast significant doubt about the group's and company's abilities to continue as a going concern.

Financial instruments

The group classifies its financial assets and financial liabilities in the following categories: financial assets and financial liabilities at fair value through profit or loss; receivables; held-to-maturity investments and other financial liabilities.

Management determines the classification of its investments at initial recognition. A financial asset or financial liability is measured initially at fair value plus transaction costs that are directly attributable to its acquisition or issue.

Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. A provision for impairment of trade receivables is established when there is evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter an insolvency arrangement or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flow. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within administrative costs. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against administrative costs in the statement of comprehensive income.

Financial assets at fair value through profit or loss ("FVTPL")

Financial assets are classified as at FVTPL.

FVTPL assets principally represent investment securities. 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. FVTPL 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, or 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. Financial assets at fair value through profit or loss are stated at fair value, with any resulting gain or loss recognised in the income statement. The net gain or loss recognised in the income statement incorporates any dividend or interest earned on the financial asset.

It is the Group's policy to recognise investments held in unlisted companies as non-current assets or current, depending on the Group's intensions for, and potential timescales anticipated in, realising the investment. They have been designated FVTPL because they are managed and evaluated on a fair value basis and information on the assets fair value is provided to the board in the management financial statements.

Options and warrants held are valued using the Black-Scholes model.

Trade and other payables

Trade and other payables are initially measured at fair value and subsequently held at amortised cost. At each reporting date, these trade payables are measured at amortised cost using the effective interest rate method. It is the group's policy to remit in respect of trade payables in the month following invoice.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the group has transferred substantially all risks and rewards of ownership. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the company is recognised as a separate asset or liability in the statement of financial position. In transactions in which the group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset, the group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.

There have not been any instances where assets have only been partially derecognised.

The group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Amortised costmeasurement

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minus principal payments, plus or minus the cumulative amortisation using the effective interest method for any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

Fair value measurement

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction on the measurement date. The fair value of assets and liabilities traded in active markets are based on current bids and offer prices respectively. If the market is not active the group establishes a fair value by using appropriate valuation techniques. These include the use of recent arm's length transactions, valuation models and reference to other instruments that are substantially the same for which market observable prices exist.

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 reporting date are reported at the rates of exchange prevailing at that date.

Gains and losses arising during the year on transactions denominated in foreign currencies are treated as normal items of income and expenditure in the statement of comprehensive income.

Investments in subsidiary undertakings

Investments in subsidiary undertakings are stated at cost, less any provision for a reduction in value.

Investments in subsidiary undertakings

Investments in subsidiary undertakings are stated at cost, less any provision for a reduction in value.

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the year of the lease.

Finance leases

Assets held under finance leases are capitalised at their initial cost and the corresponding leasing obligations are shown as liabilities. The Group currently holds no assets under finance lease arrangements.

Property, plant and equipment

Plant and equipment are stated at cost, net of depreciation and any provision for impairment. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use

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: Five years

Items within plant and equipment:

Computer equipment and software: Four years

Depreciation is provided at a rate of 25% on a reducing balance value basis on office equipment and furniture.

The carrying values of plant and equipment are subject to depreciation, and an annual review of residual values and useful lives, any impairment is charged to the statement of comprehensive income

Goodwill

Goodwill has been calculated as the excess of the fair value paid on acquisition, plus associated costs over the fair value of the net assets of the company acquired. Goodwill is reviewed at least annually, or when event's or changes in economic circumstances indicate that impairment has taken place. Any impairment is recognised in the statement of comprehensive income. Such impairment is permanent, as it is not permitted to be reversed in future years.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits.

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 differ from net profit as reported in the statement of comprehensive income 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 reporting 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.

The carrying amount of deferred tax assets is reviewed at each reporting 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 year when the liability is settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, 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 is measured on an undiscounted basis at the tax rates that are expected to apply in the years in which timing differences reverse, based on tax rates and laws enacted or substantively enactive at the balance sheet date.

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 sales related taxes.

Revenue includes fees for corporate finance advisory services, which are taken to the statement of comprehensive income when the services are performed. The group's entitlement to transaction based fees typically occurs when the transaction becomes unconditional. Revenue also comprises gains less losses on shares, arrived at after taking into account attributable dividends and directly related interest, together with commission income receivable, which is recorded on trade date when earned, and retainer fees which are recorded in the period earned.

Movements in value of financial assets are recognised in revenue, a more detailed description of this accounting policy is reported in note 4 to these financial statements.

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.

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 and others. 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 date of grant 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 and adjusted for the effect of non-market-based vesting conditions.

The cumulative effect of these transactions on the income statement is mirrored in the share compensation reserve.

Pensions

The group operates a contributory money purchase pension scheme. Contributions payable for the year are charged in the statement of comprehensive income. The group has no further payment obligations once the contributions have been paid.

General information

The group is regulated by the FCA and is required to follow the capital adequacy requirements of this regulator. The group recognises credit, operational and financial risk in this calculation and reports upon this to the regulator quarterly.

2. Critical accounting judgement and key sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances, the results of which form the basis of judgements about carrying values of assets and liabilities. Actual results may differ from those amounts reported.

Valuation of investments

Investments include securities and options over securities which have been received as consideration for corporate finance services rendered. These assets have been valued according to bid price where applicable, adjusted in respect of share options which are either still to be exercised or have not been pre-sold through a contract for difference.

Where no market data is available, unquoted equities are valued with reference to the most recent relevant corporate action. At 31 March 2014 there was such investment which was measured at the subsequent sales proceeds.

Bad debt policy

The group regularly reviews all outstanding balances and provides where there is evidence of impairment for amounts it considers irrecoverable. The assessment of bad debt is made with reference to advice from a third party debt collector where debts have proven irrecoverable from internal procedures. There is no attempt to make partial provisions unless negotiations with the debtor have resulted in a refund of previously reported fees.

Goodwill

Carrying value of goodwill with indefinite lives is reviewed for impairment annually or more frequently if there are indicators of a fall in value below carrying amount. This requires an estimation of value in use of the cash generating unit to which the goodwill is allocated. Identifying the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Expectations about future cash flows will vary between years. Changes in market conditions and expected cash flows may cause impairments in the future. The major assumptions which have an impact on present value of projected cash flows are the discount rate, and the growth rate. More detail of these calculations is found in note 12 to the financial statements.

Going Concern

For a full description of the relevant judgements and considerations, refer to Note 1.

Investment in subsidiary

The company's investment in Daniel Stewart & Co plc involves judgement regarding the value of that company. This requires consideration of estimated cashflows from dividend flows, sales of the business and so forth. The share values of the Group are also relevant though not conclusive.

3. Business and Geographical revenue streams

The directors consider that the business comprises one segment under IFRS8, and do not analyse profit by business unit. The following information is provided by revenue stream and geography.

Trading Revenue

The majority of trading revenue derives from the UK; the location of the provision of the service is the basis for attributing revenues geographically.

Transaction Revenue

This revenue derives from the placing of new shares and associated corporate advisory fees.

Retainer Revenue

This revenue derives from recurring advisory fees, predominately from our appointment as corporate broker.

Secondary Commission

This revenue derives from client share trading in existing shares brokered by the Group.

Business and Geographical revenue streams

The costs of the group are predominantly of a fixed nature, therefore any allocation of these costs on a geographical or activity basis would involve utilisation of arbitrary proportions. The nature of the Group's business and activity is such that these allocations are not performed or therefore reported to the board. The management consider that this exercise would not enhance the disclosure above.

4. Financial Risk Management and financial assets

Strategy

The group board is responsible for approving all risk management policies and for determining the overall risk appetite for the group. The group board receives a quarterly financial report detailing key credit risk exposures, operational risk incidents and losses.

Key market risks are considered by the senior management on a formal basis, weekly, and are subject to continuous rolling scrutiny.

The group board monitor and assess all types of risk within the group to ensure that internal controls are properly established so that the group risk exposure is maintained within the internally evaluated parameters.

Equity price risk

Non-current financial assets are those intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in market conditions. They are initially recognised at fair value including direct and incremental transaction costs. They are subsequently held at fair value. Dividends and interest on these equity instruments are recognised in the statement of comprehensive income when the entity's right to receive payment is established. Realised and unrealised gains and losses arising from changes in fair value are included are recognised in the statement of comprehensive income.

For financial assets that are quoted in active markets, fair values are determined by reference to the current quoted bid price. Where independent prices are not available, fair values are determined using valuation techniques with reference to observable data. This valuation is carried out as the information becomes available. Derivative contracts relating to equity options and warrants held have been acquired at zero cost in lieu of corporate finance fees are valued when earned and then at each reporting date with reference to market data and liquidity of the prevailing investment. Options and warrants held are valued using the Black-Scholes model.

The group and company face risk arising from holding investments in markets that fluctuate. The group and company manage equity price risk by establishing individual stock limits and overall investment criteria and management reports are prepared daily in support of a review regime. The board reviews investments at all meetings.

Financial assets at fair value through profit or loss

Fair value estimation

The company has adopted the amendment to IFRS 13 for financial instruments which are measured at fair value at the balance sheet date. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities,

Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, observed either directly as prices or indirectly from prices These are valued with reference to a Black Scholes model, and

Level 3: Inputs for the asset or liability that are not based on observable market data. There is one remaining asset in this level, this is valued with reference to an arm's length third party transaction underway at, and settling shortly after the year-end. Previously this asset had been valued with reference to a discounted cash-flow.

Financial assets held by the group and company are:

Financial Risk management

Capital Regulations 2014

The Fourth editions of the Capital Requirements Directive and Capital Requirements Regulation were approved by the European Union Council of Ministers end of June 2013 and came into force from 2014. The Capital Requirements Regulation introduces the first single set of prudential rules for banks across the European Union. It applies directly to all banks in European Union member states. It should help to ensure that the Basel III international standards for bank capital adequacy are fully respected in all European Union member states. European Union Banks will be supervised by European Union member states' competent authorities, in collaboration with the European Union Banking Authority, whose supervisory powers will be expanded.

The Capital Requirements Directive and Capital Requirements Regulation require the Group to monitor and report new capital requirements. The Group will be required to set aside more and better capital as a cushion against hard times.

Group Regulatory Status

In regulatory terms, the Daniel Stewart Securities Group is a 'UK Consolidation Group' subject to consolidated financial supervision, reporting and prudential requirements.

Regulatory reporting is undertaken for DSC, the regulated entity, as an IFPRU 125K Limited Licence Investment Firm and the DS Group on a consolidated basis.

Capital Requirement Approach

The framework for the capital management is rooted in the Capital Requirement Directive's Pillars I, II & III. Pillar I contains a set of rules listed in the Capital Requirements Regulation for calculating the minimum capital requirement. Pillar 2 requires the firm to assess whether its Pillar 1 capital is adequate to meet its risks. The firm's assessment is based on a consolidation of assessments of material risks at the Group and subsidiary levels, while Pillar III contains the disclosure aspect.

The assessment and reporting of capital adequacy is undertaken on a consolidated basis for the Group.

Capital requirements - Pillar 1

Own Funds Requirement

Under Pillar 1, our own funds requirement (regulatory capital requirement) is calculated as follows: Subject to the base requirement of €125,000, Own Funds Requirement in the case of Daniel Stewart is the higher sum of Credit Risk and Market Risk or the Fixed Overhead Requirement - based on 3 months' overheads.

Credit Risk

Credit risk is calculated in accordance with the Standardised Approach. The Daniel Stewart Group has no direct exposure to a central counterparty.

Valuation

Derivatives, stock-lending, repurchase and long settlement transactions are subject to specific valuation procedures. Other assets are to be valued at their accounting value, net of general and specific credit risk adjustments.

Calculation

The risk weight is calculated by multiplying the value of the asset by the risk weight of the asset (expressed as a percentage). This expresses our exposure as a Risk Weighted Asset.

Off balance sheet Credit Risk

The Daniel Stewart Group has no direct exposure to off balance sheet Credit Risk.

On Balance Sheet Credit Risk - as at 31 March 2014

Market Risk

Daniel Stewart is not exposed to trading book risk. Foreign Exchange risk is not deemed to be material, however it may occur from time to time as a result of charges in a foreign currency.

Fixed Overheads Requirement

The fixed overheads requirement is based on a quarter of the previous year's fixed overheads, less allowable deductions, such as discretionary items and one-off non-recurring costs.

Total Risk Exposure

The Firm's Total Risk Exposure is the higher of either its Fixed Overheads multiplied by 12.5, or the sum of its Credit Risk and Market Risk.

Own Funds Requirements: Pillar 1- Article 92

Capital ratios are expressed as a ratio of the Firm's Total Risk Exposure.

Article 92(1)(c) sets out a total minimum capital ratio of 8%, which translates to an overall regulatory capital requirement of £950,158.

Risk controls & Mitigation

Key controls against include robust contractual terms, due diligence being performed on the debtors or counterparties and adequate credit control procedures involving a third party debt collection agency and liens over client assets.

The Group also endeavours to minimise its credit risk exposure in a number of other ways:

Client acceptance

Due diligence is conducted on Corporate clients prior to take-on and ratified by at New Business Committee meeting.

Robust Contractual Terms

All corporate finance and broking assignments are governed by formal, standard form engagement letters / retainer agreements.

Retainer income

Fees are quarterly or monthly in advance and withdrawal as NOMAD or broker can be threatened in the event of non-payment which could lead to share suspension. Use of a debt collector and winding up petitions as required.

Transactional fees

Fees and commissions are usually deducted from the proceeds of share issues for clients to mitigate credit risk.

Uncovered debits

Jarvis' back office system and controls are designed to help ensure that cash cannot be paid from a client account until it has cleared. Market risk exists where a client takes up a position without having any cash or assets on account with us and fails to pay by settlement day. This may result in a credit risk exposure where the market movement is adverse. Such situations are managed carefully on a case by case basis, and are extremely rare.

Clearing and settlement

For equity broking, we operate under a Model B clearing agreement with Jarvis Investment Management who assume the direct credit and counterparty risks in connection with the trades we exercise, although Daniel Stewart & Co plc is responsible for managing the credit risks of its clients. For Contract For Difference services, clients contract directly with the provider, GFT, and our credit risk is capped according to the rebate we have earned from GFT.

Dealing Limits

The Group's quantitative risk appetite is defined by its dealing limits. Dealing limits are imposed by Jarvis and subject to review.

Bank deposits

Group policy is to hold surplus cash in bank accounts with reputable UK banks. The Group's principal bankers are Adam & Company, a subsidiary of The Royal Bank of Scotland. After due consideration, the Group has determined that it is not necessary to diversify exposures. In addition, a cash deposit is held with our Model B clearer, Jarvis Investment Management, who are authorised and regulated by the FCA (for financial reporting purposed this is shown as a receivable).

Market Risk

Daniel Stewart does not have any trading book positions.

Liquidity Risk

Liquidity risk is the risk that the firm, although solvent, does not have available sufficient financial resources to enable it to meet its obligations as they fall due, or can secure such resources only at excessive cost.

Other than cash, the next liquid asset we have is our accounts receivables. If Daniel Stewart trades at break even or better, debtors plus cash are sufficient to pay debts as the fall due. The risk therefore arises (when trading break even or better) when the accounts receivables remain unpaid. The risk is managed through credit control procedures, payment up front for our corporate broking services and retaining control of transaction funds wherever possible.

The bulk of our revenue is captured at source by our back office settlement providers, Jarvis (and GFT for Contracts For Difference) as it relates to broking activities. This greatly reduces both our liquidity and credit risk. The only other significant current source of income not captured by our settlements providers is corporate broking retainers from AIM clients.

Controls & Mitigation

Liquidity requirements are managed through:

· Daily monitoring of bank balances

· Monitoring of liabilities in the purchase ledger

· Cash flow projections

· Monitoring of projected income.

· As a company quoted on AIM, it is possible to raise money on the capital markets.

· Structured credit-control process.

Operational Risk

The risk of a loss resulting from inadequate or failed internal processes, people and systems, or from external events, including legal risk.

Identification & measurement

Operational risk is assumed to cover all other risks not specifically assessed elsewhere in this document and is therefore an extremely broad category, covering anything from employee errors to business disruption. Whilst the breadth of risks and the probability of them occurring is impossible to predict, we provide for operational risk based upon analysis of the key risks the firm faces and the likely cost associated. Where the likely cost of an event cannot be borne by the firm without breaching regulatory capital requirements and if financing is not available, then a wind down event occurs.

Controls & Mitigation

Key man/team risk is mitigated by non-compete clauses in employment contracts and the proposed insurance policy in respect of Peter Shea alluded to above..

The Group makes appropriate investments in technology, capital and staff (including training) to ensure that its operational risks are adequately managed. Furthermore, the trade settlement function has been outsourced via a 'Model B' clearing and custody arrangement provided by Jarvis, subject to daily monitoring and oversight by Daniel Stewart& Co plc, which further reduces operational risk in this area.

Operational risk is monitored continually to assess any upwards trends of processing errors, customer complaints, and other events that can be caused by operational errors, so that they are identified, investigated and rectified at the earliest opportunity

The Group takes particular care not to enter into new markets, customer types or products without fully considering the operational aspects of such (including its impact on resources) and avoids product structures or transactions, which incur significant operational risks given its low overall appetite for risk.

Insurance is used to limit operational exposure for a number of key risks. The firm does not have a Professional Indemnity policy in place.

Compliance risk

The Group has a low compliance risk appetite and seeks to ensure:

· relations with its regulators are clear, open and honest;

· response to regulatory issues is timely; and

· board and Senior management involvement in compliance matters.

In order to monitor compliance issues the Board and the Audit Committee will, through the Compliance Officer, receive regular reports on issues arising from compliance monitoring.

Business Risk

Business risk may arise from one or more of the following causes, which may occur together:

· Adverse market conditions, economic / business cycle.

· Difficulty in raising capital in unfavourable conditions (known as pro-cyclicality risk).

· Failure of business strategy / poor decision making, and

· Loss of business due to competition from other firms

Identification & measurement

Business risk is the risk that exists if our business fails to achieve budget. This is because the budget is prepared to account for the firm's capital adequacy and liquidity requirements and failure to meet budget places additional strain on the firm in this area.

In December 2014, the firm relinquished its NOMAD licence and this may have a material impact on the firm's revenue going forwards but not necessarily profit.

Controls & Mitigation

In meeting the challenge to address past losses, a number of management actions have been undertaken to address different aspects of business risk:

Review

Review of capital adequacy and contingency plan in the event that our surplus of own funds falls below a defined trigger level.

Monthly management accounts

Decisive action is taken if a material variance to budget emerges. All variances are explained.

Headroom

Ensuring there is sufficient headroom in our share capital in the event that a small placing needs to be done at short notice.

Minimal proprietary trading

The Group no longer trades extensively in equities.

Injection of capital

The raising of capital to strengthen our balance sheet and regulatory capital, when needed.

Avoidance of working capital debt

The group operates a formal and rigorous credit control regime.

Cost reduction

The Group has recently increased its activities, while maintaining its cost base. Cost reduction activities are anticipated to create a reduction in the year ended 31 March 2015. Business risk can be further mitigated to a degree through further cost cutting as required.

Competitive risk

Ensure that our service offerings and prices continue to meet the demands of our clients.

Having reviewed our Pillar 2 assessment, the Board considers that our Pillar 1 fixed overheads requirement of £950,170 is in excess of both the Pillar 2 assessment and our wind down costs.

5. Staff costs

The Group operates a contributory money purchase pension scheme.

The pension contribution in respect of directors is £4,284 (2013 - £ 8,892).

During the year the group had an average of 32 employees, of whom 8 were support and management and 24 sales based. (2013: 39, (9, support and management, 30 sales-based)). The aggregate group directors', including non-executive directors, remuneration earned for the year was £358,086, (2013: £215,000).

6. Result for the year

The result for the year is stated after charging:

7. Bank interest receivable and similar income

8. Interest payable

9. Tax

There is no corporate tax charge for the year

The tax charge for the year differs from that resulting from applying the standard rate of UK corporation tax of 23% (2013 : 24%) to the loss before tax for the reasons set out in the following reconciliation.

"The standard rate of corporation tax in the UK changed from 24% to 23% with effect from 1 April 2013. Accordingly, the Group's result for this accounting year are taxed at an effective rate of 23%, hence overseas tax regimes have minimal impact on the Group position.

Disallowable items include such expenditure as entertaining or expenses which are not wholly and exclusively in the course of the business. Timing differences are in respect of expenditure relating to share based payments. Total tax losses carried forward are £8,728,144; these have not been recognised for deferred tax purposes due to uncertainty over future levels of profitability.

10. Exceptional Items

During the year ended 31 March 2014, goodwill impairment of £924,878 (2013: £356,525) was recognised in the consolidated statement of comprehensive income. The review of goodwill impairment in the context of the market value of the Group, and revenue and profit forecasts utilising consistent measurement has resulted in an impairment to goodwill of £924,878 (2013:£356,525), The deterioration in financial outlook for the purposes is mostly due to declines in expected levels of overseas revenue.

11. Earnings per share

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

The group has issued options. These are disclosed in note 21. All of these were non-dilutive.

12. Goodwill

Impairment has been considered in context of the market value of the Group as well as revenue and profit forecasts as set out in more detail in this note 1. The discount rate and growth rates applied to the valuation at 31 March 2014 are the same as those applied at 31 March 2013. The budget is prepared with reference to one Cash Generating Unit and accordingly Goodwill is attributable to a single Cash Generating Unit. Revenue and profitability projections within the group budgets are renewed regularly, the last version having been approved by the Board in December 2014. Revenue is based upon contracted transactions and known transactions (un-contracted to date) the amount of unidentified revenue within this budget for the year ended 31 March 2015 is £150,000. This approach is consistent with previous years.

Goodwill of £1,731,532 arose from the acquisition of Daniel Stewart & Co plc in 2002 and additional goodwill of £960,406 arose from the acquisition of Mena in July 2010. As a result of the merger of these two operations, the directors now consider that the total goodwill of £2,691,938 relates to a single cash generating unit (CGU) -"Daniel Stewart Core Business". Impairment of Goodwill has been reviewed with reference to value in use reflecting a discounted cash flow model based upon the Group's budget, which runs for three years as well as the fair value, less costs to sell, of the CGU. The market value of the Group provides relevant information in this regard. The cash flows underpinning the value in use assessment have been projected for a further two years with a growth rate of 1% per annum, and a discount rate of 12.5%. No Growth rate is applied after the budgeted year. These assumptions are based upon recognised financial modelling rates applied in valuing similar businesses. Further review of costs relating to the establishment of a Licensed Corporate Finance house has also been undergone in respect of the goodwill deriving from the acquisition of Daniel Stewart & Co plc and the share price of Daniel Stewart Securities plc. The most sensitive area is the initial revenue projection, which contains retainer income, which is subject to contract. Revenue projections are below those estimated in earlier years due to the continued adverse market conditions. The directors have determined the carrying value based on the higher of the two bases, this being the fair value less costs to sell. The fair value has been assessed with reference to the market value of shares in the Group, which are considered to be level one under the IFRS 13 hierarchy.

On 8 July 2010 Daniel Stewart Securities plc acquired 100% of the share capital of Mena RL FZC and MRL Holdings Limited at a cost of £990,193 which was made up from £375,000 cash, 25,000,000 in shares of Daniel Stewart Securities plc which have been valued at the prevailing market price of 2p when issued, and a write off of cash advanced to Mena by Daniel Stewart of £115,193. The companies were acquired in order for the group to exploit opportunities in the middle and far east; these were presented in the form of the contact list held by the acquired companies, of companies in that geographic area that were seeking listings on AIM. Mena and MRL were unable to offer the relevant services due to regulatory requirements which Daniel Stewart were able to offer. The Fair value of the net assets of the companies on the acquisition date were £29,787 of which £32,398 was Tangible non-current assets, £14,419 loans receivable and £3,466 cash and cash equivalents. Accounts payable amounted to £20,496. The fair value of the loans receivable is not significantly different from the contractual amounts receivable.

13. Investments in subsidiaries

The impairment in the book values of the company's investment in Daniel Stewart & Co plc, Daniel Stewart Leasing Limited and Mena RL FZC arose from the impairment review exercise detailed in note 12. Using this information, that is the market value of the Group as well as revenue and profitability forecasts for the company, the directors concluded an impairment had occurred.

Additional equity was issued by Daniel Stewart & Co Plc in order to maintain that company's regulatory capital requirement.

Subsidiary companies:

Daniel Stewart & Company Plc: Investment banking - Registered in England and Wales

Daniel Stewart Leasing Limited: Lease finance - Registered in England and Wales

Daniel Stewart (Asia) Limited (dormant): Investment banking - Registered in Hong Kong

Mena RL FZC (dormant): Marketing in the Far and Middle East - Registered in Dubai

MRL holdings Ltd (dormant): Marketing in the Far and Middle East - Registered in British Virgin Islands

Daniel Stewart Securities Plc holds 100% of the issue share capital of each subsidiary company.

Daniel Stewart (Asia) Limited (dormant) was incorporated on 28th November 2011.

None of the UK subsidiaries are exempt from filing financial statements.

14. Property plant and equipment

Included within the cost of plant and equipment is £748,643 (2013: 506,820) of fully depreciated assets. No assets are held under finance lease. There was no committed capital spend at 31 March 2014, (2013: £nil), however the Group is to move offices within the next twelve months. It is anticipated that this will entail capital expenditure, currently not subject to contract, of approximately £200,000.

15. Loans receivable Restated

16. Trade and other receivables

All receivables are receivable within one year of the reporting date, and are reported after taking impairment into account. As at 31 March 2014 debts past due amounted to £729,282.

Allowance has been made for estimated doubtful and irrecoverable amounts. The directors consider that the carrying amount of trade and other receivables approximates their fair value. All amounts considered uncollectible have been provided against.

The group has no significant concentration of credit risk here, with exposure spread over a large number of counterparties and customers.

Included within trade and other receivables for the year ended 31 March 2013 is £6,682 in respect of finance leases, this amount is net of interest of £70 relating to future years. These amounts were fully repaid in the year.

17. Cash and cash equivalents

18. Trade and other payables

The loan payable is unsecured. The interest chargeable is at 8% per annum and is repayable upon demand.

19. Share Capital

The group issued 10,000,000 ordinary shares to Jade Global Investment Limited on 7 January 2014 for cash. This represents 1.92% of the total issued share capital of the company. The consideration paid was 2.5p per share.

20. Operating leases

At the reporting date, the group and company had the following outstanding commitments for future minimum lease payments calculated in accordance with the contract, with reference to price changes wherever known.

Significant commitments of the group at 31 March 2014 were as follows:

21. Share based payments

The Group participates in two share option schemes for all employees of the Group which provide employees with the option to acquire shares in the parent company. Options are exercisable at a price agreed upon in the share option agreement on the date of grant. The vesting period lies between immediate exercise and three years. If the options remain unexercised after 10 to 13 years from the vesting date, or the option holder ceases to be an employee or office holder within the group before the options vest, the options will lapse.

The awards have been valued using a Black Scholes model with reference to relevant vesting periods and actual share prices at the date of issue, exercise date and expected volatility. Historic share price volatility applied has been 53.91%, an attrition rate of 14.21% and a risk free interest rate of 1% as applied during the historic year in which the awards were made. The weighted average price used in the valuation model is 4.95p.

No options were granted in 2013 or 2014 and all awards are fully vested. Accordingly there was no share based payment charge in either year.

The share options outstanding at 31 March 2014 are as follows:

Options were issued at an exercise price equal to the mid-market price on the date of issue.

Eighteen staff were taking part in the scheme at 31 March 2014 (2013: 23).

300,000 options expired during the year due to attrition, the exercise price of these shares was 4p.

The weighted average remaining life of the above options is 2,641 days.

22. Events after the reporting year

On 1 October 2014 the Company announced that it was not able to publish its Annual Report for the year ended 31 March 2014. As a consequence, and pursuant to the AIM Rules for Companies, the Company's shares were temporarily suspended.

During the final stages of preparation of the Accounts, the Company identified a shortfall in its regulatory capital, under the European Capital Requirements Regulations and Directive CRR/CRD IV. Daniel Stewart Securities plc entered into discussions with potential investors in order to strengthen the Company's balance sheet for regulatory capital purposes.

On 6 November 2014 Daniel Stewart Securities plc announced that as a result of a General meeting the company had authority to issue and allot 380,000,000 new Ordinary Shares and to disapply of pre-emption rights.

 On 12 December Daniel Stewart & Co plc relinquished its Nomad licence.

 On 29 January 2015, Daniel Stewart securities plc announced that the company had received cash subscriptions for 111,000,000 new shares and a Non-redeemable callable bond to raise £1.22million. Further to this Peter Shea was to acquire and convert a loan providing a further £0.3million

Cash Subscription

The Group has raised £440,000 through the subscription by institutional and other investors for 111,000,000 new ordinary shares of 0.25p each in the Company at 0.4p per new Share, representing a 14.3% premium to the Company's closing price on 30 September 2014, being the last day prior to suspension of the Company's Shares.

The group has raised a further £775,000 through subscription by Epsilon Investments PTE Limited, a Company registered in Singapore and controlled by Zainab Binte Mohamed Omar, to a Non-redeemable callable bond. The Bond confers on the bondholder the right to subscribe for 194,000,000 new Shares upon payment of a further £1,000, equating to a cost of 0.4p per new Share. Conversion of the Bond by EIL is subject to EIL receiving Financial Conduct Authority ("FCA") controller status, following which EIL shall promptly exercise the Bond. Upon conversion of the Bond EIL shall hold an interest in approximately 29.39% of the Company's Shares as enlarged by the full Refinancing.

Loan Conversion and Director Dealings

On 28 January 2015 Peter Shea, Chairman and Chief Executive purchased and converted a loan comprising £225,000 principal, together with rolled up interest of £75,000 at a conversion rate of 0.4p per Share (the "Loan Conversion"). As a result, 75,000,000 new Shares were issued to Mr Shea, following which he was interested in 154,338,874 Shares, representing approximately 17.15% of the Company's Shares as enlarged by the subscription described in this Directors' report.

23. Related party transactions

Daniel Stewart Securities plc holds 100% of the issued share capital of Daniel Stewart & Co plc.

Adam Wilson a major shareholder of Daniel Stewart Securities plc has been paid £281,667 by Daniel Stewart & Co plc in respect of his consultancy agreement with Daniel Stewart Securities plc. At 31 March 2014 £22,500 had been paid in advance to Adam Wilson in respect of this agreement.

During the year Daniel Stewart & Co plc paid £7,525. In respect of health insurance for Stuart Lucas who is a director of Daniel Stewart Securities plc, the parent company.

During the year Daniel Stewart & Co plc paid £4,494 in respect of life and health insurance for Adam Wilson who is a significant shareholder in Daniel Stewart Securities plc, the parent company.

Peter Shea and Adam Wilson are shareholders in The Confederacy Limited. Peter Shea is a director of this company. There were no transactions or balances with the Group.

Stuart Lucas is a director and shareholder is Asset Match Limited, during the year Asset Match Limited paid £7,275 commission to Daniel Stewart & Co plc.

All amounts due have been settled in cash.

Peter Shea has provided a £10,000 personal guarantee in respect of credit cards from Adam & Co bank.

Rockridge Investments SA a major shareholder of Daniel Stewart Securities plc has advanced £225,000 (2013 : £225,000) to the company in the form of a unsecured convertible loan, repayable on demand, with interest is chargeable at 8%.

Daniel Stewart Securities Plc, the parent company, manages the bulk of the group's cash in order to carry out treasury. From time to time cash will be transferred between group companies in order to meet the normal operating obligations of the subsidiary companies. In the year ending 31 March 2014, Daniel Stewart Securities plc paid £675,099 (2013: Paid £1,180,145) to Daniel Stewart & Co plc.

There has been no management charge from Daniel Stewart & Co plc to Daniel Stewart Securities plc in the year (2013: £100,000).

In December 2005 the Employee Benefit Trust made loans of £225,000 to Peter Shea and Alastair Cade, a director at the time. At the same time a further loan of £50,000 was made to Tom Jenkins, also a director at the time. These loans are un-secured, interest free and due for repayment after 30 years. The loans have been discounted in accordance with accounting principles and Income tax and national insurance has been provided.

Key management compensation

Key managers have been identified as the executive management team of the group.

Pension benefits relate to a defined contribution scheme, Life assurance and medical insurance cease when employment ceases. There are no contractual provisions for post-termination benefits, accordingly statutory requirements apply. Options granted to key management are disclosed in the directors' report.

24 Contingent liabilities

A contingent liability in respect of exposure arising from client share trading exists in the event of unexpected failure to perform by Jarvis. All unsettled trades at 31 March 2014 have now been fully satisfied. At 31 March 2014, the group and company had contingent liabilities in this regard in respect of related open positions of £2,041,088 (2013:£3,900,000).

25. Restatements

Restatements and their effect upon reserves and net assets bought forward are as follows: