TIDMCNKS
RNS Number : 4036L
Cenkos Securities PLC
30 April 2020
30 April 2020
Cenkos Securities plc
Annual Results for the year ended 31 December 2019
Cenkos Securities plc (the "Company" or "Cenkos" or the "Firm")
today announces its results for the year ended 31 December 2019.
Cenkos is an independent, specialist institutional securities
group, focused on small and mid-cap companies and investment funds.
The Group's principal activity is institutional stockbroking.
Cenkos' shares are admitted to trading on the AIM Market of the
London Stock Exchange ("LSE"). The Company is authorised and
regulated by the Financial Conduct Authority ("FCA") and is a
member of the LSE.
Highlights 31-Dec-19 31-Dec-18
------------------------------------------------ ---------- ----------
GBP25.9 GBP45.0
Revenue m m
Profit before tax GBP0.1 m GBP3.2 m
Profit after tax GBP0.0m GBP2.4m
GBP18.3 GBP33.6
Cash m m
Net assets GBP24.7m GBP27.6m
Basic earnings per share (0.2)p 4.4p
Full year dividend per share paid and proposed
(1) 3.0p 4.5p
(1) Includes a proposed final dividend of 1.0p (2018: 2.5p)
Since being admitted to trading on AIM in 2006, the Company has
returned GBP114.1 million of cash to shareholders, equivalent to
176.3p per share, before the payment of the proposed 2019 final
dividend of 1.0p per share.
Commenting the Company's Chief Executive Officer, Jim Durkin
said:
"Difficult markets in 2019, and uncertainty surrounding the UK's
exit from the European Union, has resulted in a reduction in
revenue compared to last year. This result was set against the
backdrop of a 30% reduction in the total funds raised by AIM
companies in 2019. Performance related payments to staff have been
reduced in line with net revenue, leading to a modest pre-tax
profit for the year.
The outlook for 2020 is clouded by the, as yet unknown, economic
impact of COVID-19. I am however, pleased to report that we have
started the year well, completing the largest IPO on AIM so far
this year and despite unprecedented market circumstances have also
executed a number of secondary fund raisings. We are continuing to
work closely with our corporate clients to assess the impact of
COVID-19 and the disruption that many of them are currently
experiencing. We have a good pipeline, a cost base that is
significantly below the 2019 level and a strong balance sheet, so I
look forward to 2020 with tempered optimism. We are well placed to
face the challenges ahead."
For further information contact:
Cenkos Securities plc
Jim Durkin - Chief Executive +44 20 7397
Officer 8900
Nominated Adviser
Spark Advisory Partners Limited
Matthew Davis +44 20 3368 3550
Public Relations
Buchanan Communications
David Rydell +44 20 7466 5066
Chief Executive Officer's statement
This year's Annual Report is my first as Chief Executive since
my re-appointment in August 2019. Although 2019 was a difficult
year nobody could have foreseen the enormous impact of the
Coronavirus ("COVID-19") in 2020 to date. However, we are operating
from a position of robust financial health both from the viewpoint
of cash and capital resources and due to the quality and
flexibility of our people and the strengths of our business we as a
Company are well placed to face the challenges ahead. I look
forward to building on Cenkos' strengths going forward for all our
stakeholders.
Performance
I was formally appointed as CEO in August 2019 at a challenging
time for Cenkos. The first half of the year had seen revenues
plummet to GBP10.6 million. At the same time overheads were rising
due to increased legal and regulatory fees, costs associated with
data and other outsourced suppliers and, in addition, the Company
was obliged to extend the contracts of various Board members to
provide control function cover, ahead of my approval by the
regulator. Although I am pleased to report that revenues in the
second half of the year increased to GBP15.3 million, this
performance combined with the consequences of MIFiD II, prompted me
to conduct an in-depth review of overheads, leading to a
consultation process involving a number of employees. This review
incurred an additional GBP1.3 million of one-off costs associated
with the restructuring but will result in our fixed cost base being
some GBP3 million lower in 2020.
Markets have been very difficult in 2019, reflecting
uncertainties around Brexit and the General Election. I am,
however, pleased to report that we performed well in terms of
market share executing three of the 10 IPOs on the AIM market and
raising GBP664 million for our corporate clients. Although down on
last year due to the rotation of several investment trusts, some
de-listings and a generally quieter period of M&A activity, our
client base remains solid at 100 companies and investment trusts.
Of these, 45% have been with Cenkos over 5 years reflecting our
ethos of building and developing long-term relationships.
I am pleased to report that the implementation of the new SMCR
regime was successful and proceeded according to plan. As with
other firms we continue to invest in people, systems and technology
to meet the requirements of new regulation and legislation.
Delivering good client outcomes lies at the heart of the Firm and
we believe that all regulation must be accompanied by a strong
internal culture underpinned by the highest ethical and
professional standards. The highest standards need to be set by the
Board, but ultimately all our staff must take responsibility for
the way in which they conduct business and work with
colleagues.
The Board
There have been several changes to the Board in 2019. In July
2019, Jeremy Miller joined the Board as a Non-Executive Director
and has brought further independence and challenge to the Board.
Joe Nally and Paul Hodges, founder shareholders of Cenkos, stepped
down as Executive directors in September 2019. On behalf of the
Board, I would like to thank them for their valuable contribution.
I would also like to thank Jeff Hewitt for 11 years of service as a
director and acting chairman of Cenkos. In November 2019, it was
announced that Julian Morse, the head of our Growth Companies team,
would join the Board as an Executive Director subject to regulatory
approval, this approval has just been received and his appointment
to the Board will be confirmed shortly.
I am pleased to report that following a search for a new
Chairman, in February 2020 we announced the appointment of Lisa
Gordon as your new Chairman subject to regulatory approval.
Assessment of Coronavirus impact
Cenkos responded to COVID 19 promptly by enacting its business
continuity plan and successfully implementing a comprehensive
remote working capability. These procedures are working well and
have enabled us to ensure both the wellbeing of our staff and the
ability to continue servicing our clients during this period of
uncertainty. Due to the quality and flexibility of our people and
the strengths of our business, our ability to attract and win new
high-quality corporate clients remains strong. We continue to sign
up clients and have the capacity to add many more to our stable. We
are operating from a position of robust financial health both from
the viewpoint of cash and capital resources and, in addition, the
actions referred to above reduce the fixed cost base, thus
providing an even stronger foundation for future growth.
Outlook
The outlook for 2020 is clouded by the as yet unknown economic
impact of COVID-19. I am however, pleased to report that we have
started the year well, completing the largest IPO on AIM so far
this year and despite unprecedented market circumstances have also
executed a number of secondary fund raisings. We are continuing to
work closely with our corporate clients to assess the impact of
COVID-19 and the disruption that many of them are currently
experiencing. Our pipeline is good, so I look forward to 2020 with
tempered optimism and with a cost base that is significantly below
the 2019 level. We are well placed to face the challenges
ahead.
Dividend
Our confidence in Cenkos over the long term remains undimmed and
so we are pleased to announce a 1.0p final dividend which brings
the full year dividend to 3.0p a share. We remain in a strong
position from a capital and cash point of view. Since being
admitted to AIM we have returned GBP114.1m of cash to shareholders,
equivalent to 176.3p per share, before the payment of the proposed
2019 final dividend of 1.0p per share.
Income statement
For the year ended 31 December 2019
2019 2018
GBP 000's GBP 000's
============================================== ========== ==========
Continuing operations
============================================== ========== ==========
Revenue 25,916 44,953
================================================== ========== ==========
Administrative expenses (25,801) (41,814)
Operating profit 115 3,139
================================================== ========== ==========
Investment income - interest
income 106 103
Finance costs - interest
on lease liability (76) -
Profit before tax from continuing operations
for the year 145 3,242
================================================= ========== ==========
Tax (101) (805)
Profit after tax for the
year 44 2,437
-------------------------------------------------- ---------- ----------
Attributable to:
============================================== ========== ==========
Equity holders of Cenkos
Securities plc 44 2,437
Basic earnings per share (0.2)p 4.4p
================================================== ========== ==========
Diluted earnings per share n/a n/a
================================================== ========== ==========
Statement of comprehensive income
For the year ended 31 December 2019
2019 2018
GBP 000's GBP 000's
Profit for the year 44 2,437
================================================= ========== ==========
Amounts that will not be recycled to income
statement in future periods
================================================ ========== ==========
Loss on FVOCI financial
asset (46) (180)
================================================= ========== ==========
Tax on FVOCI financial
asset 9 29
Other comprehensive losses (37) (151)
---------------------------------------------- ---------- ----------
Total comprehensive income for
the year 7 2,286
---------------------------------------------- ---------- ----------
Attributable to:
Equity holders of Cenkos
Securities plc 7 2,286
------------------------------------------------- ---------- ----------
Statement of financial position
As at 31 December 2019
Restated Restated
1 Jan
2019 2018 2018
GBP 000's GBP 000's GBP 000's
Non-current assets
=============================== ========== ========== ==========
Property, plant and equipment 517 558 525
================================== ========== ========== ==========
Right-of-use assets 4,540 - -
=============================== ========== ========== ==========
Intangible asset 67 100 -
================================== ========== ========== ==========
Deferred tax asset 486 520 738
================================== ========== ========== ==========
Investments in subsidiary
undertakings 1 1 1
5,611 1,179 1,264
=============================== ========== ========== ==========
Current assets
=============================== ========== ========== ==========
Trade and other receivables 13,455 18,830 20,814
================================== ========== ========== ==========
FVOCI financial assets 60 220 250
================================== ========== ========== ==========
Other current financial
assets 8,973 12,648 10,615
================================== ========== ========== ==========
Cash and cash equivalents 18,333 33,635 36,627
40,821 65,333 68,306
------------------------------- ---------- ---------- ----------
Total assets 46,432 66,512 69,570
---------------------------------- ---------- ---------- ----------
Current liabilities
=============================== ========== ========== ==========
Trade and other payables (14,715) (32,640) (36,203)
================================== ========== ========== ==========
Other current financial
liabilities (1,840) (6,018) (3,341)
(16,555) (38,658) (39,544)
------------------------------- ---------- ---------- ----------
Net current assets 24,266 26,675 28,762
================================== ========== ========== ==========
Non-current liabilities
=============================== ========== ========== ==========
Trade and other payables (5,219) (263) (366)
Total liabilities (21,774) (38,921) (39,910)
---------------------------------- ---------- ---------- ----------
Net assets 24,658 27,591 29,660
---------------------------------- ---------- ---------- ----------
Equity
=============================== ========== ========== ==========
Share capital 567 567 567
================================== ========== ========== ==========
Share premium 3,331 3,331 3,331
================================== ========== ========== ==========
Capital redemption reserve 195 195 195
================================== ========== ========== ==========
Own shares (5,436) (5,663) (3,845)
================================== ========== ========== ==========
FVOCI reserve (141) (93) 58
================================== ========== ========== ==========
Retained earnings 26,142 29,254 29,354
Total equity 24,658 27,591 29,660
---------------------------------- ---------- ---------- ----------
Cash flow statement
For the year ended 31 December 2019
Restated
2019 2018
GBP 000's GBP 000's
Profit for the year 44 2,437
============================================================== ========== ==========
Adjustments for:
========================================================== ========== ==========
Deferred consideration for Nomad business - (100)
=========================================================== ========== ==========
Net finance income (30) (103)
============================================================== ========== ==========
Tax expense 101 805
============================================================== ========== ==========
Depreciation of property, plant and equipment,
ROU assets and intangible asset 899 247
============================================================= ========== ==========
Fair value adjustment to deferred consideration 40 -
============================================================= ========== ==========
Shares and options received
in lieu of fees (3,987) (1,970)
============================================================== ========== ==========
Share-based payment expense 1,115 1,852
Operating cash flows before movements in working capital (1,818) 3,168
============================================================== ========== ==========
Decrease in net trading investments and
FVOCI financial assets 3,598 2,492
============================================================ ========== ==========
Decrease in trade and other receivables 5,212 1,998
=========================================================== ========== ==========
Decrease in trade and
other payables (17,861) (2,932)
Net cash flow from operating activities before interest
and tax paid (10,869) 4,726
============================================================== ========== ==========
Tax paid (351) (1,664)
Net cash flow from operating activities (11,220) 3,062
============================================================== ========== ==========
Investing activities
========================================================== ========== ==========
Interest received 90 90
============================================================== ========== ==========
Purchase of property, plant and equipment (197) (280)
=========================================================== ========== ==========
Acquisition of Nomad business (140) -
Net cash outflow from investing activities (247) (190)
============================================================== ========== ==========
Financing activities
========================================================== ========== ==========
Net outflow under lease
arrangement (113) -
========================================================== ========== ==========
Dividends paid (2,485) (3,573)
============================================================== ========== ==========
Proceeds from sale of shares to employees on
dividend reinvestment 40 62
============================================================= ========== ==========
Acquisition of own shares (1,277) (2,353)
Net cash used in financing activities (3,835) (5,864)
Net decrease in cash and cash equivalents (15,302) (2,992)
-------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at beginning of year 33,635 36,627
-------------------------------------------------------------- ---------- ----------
Cash and cash equivalents
at end of year 18,333 33,635
-------------------------------------------------------------- ---------- ----------
Statement of changes in equity
For the year ended 31 December 2019
Equity attributable to equity holders
Capital Own shares
Share Share redemption held FVOCI Retained
capital premium reserve in treasury reserve earnings Total
GBP GBP GBP
000's GBP 000's GBP 000's GBP 000's 000's GBP 000's 000's
At 1 January 2018 (restated) 567 3,331 195 (3,845) 58 29,354 29,660
================================= ========= ========== ============ ============= ========= ========== ========
Profit for the year - - - - - 2,437 2,437
================================= ========= ========== ============ ============= ========= ========== ========
Loss on FVOCI financial
assets net of tax - - - - (122) - (122)
Derecognition of FVOCI
financial asset - - - - (29) 23 (6)
Total comprehensive income
for the year - - - - (151) 2,460 2,309
================================= ========= ========== ============ ============= ========= ========== ========
Transfer of shares from
share plans to employees - - - 535 - (473) 62
================================= ========= ========== ============ ============= ========= ========== ========
Acquisition of own shares - - - (2,353) - - (2,353)
================================= ========= ========== ============ ============= ========= ========== ========
Credit to equity for
equity-settled
share-based payments - - - - - 1,486 1,486
================================= ========= ========== ============ ============= ========= ========== ========
Dividends paid - - - - - (3,573) (3,573)
At 31 December 2018 (restated) 567 3,331 195 (5,663) (93) 29,254 27,591
================================= ========= ========== ============ ============= ========= ========== ========
Balance at 1 January 2019 567 3,331 195 (5,663) (93) 29,254 27,591
--------------------------------- --------- ---------- ------------ ------------- --------- ---------- --------
Profit for the year - - - - - 44 44
================================= ========= ========== ============ ============= ========= ========== ========
Loss on FVOCI financial
assets net of tax - - - - (37) - (37)
Gain on derecognition
of FVOCI financial assets
net of tax - - - - (11) 11 -
Total comprehensive income
for the year - - - - (48) 55 7
================================= ========= ========== ============ ============= ========= ========== ========
Issue of shares to employees
on dividend reinvestment - - - 65 - (25) 40
================================= ========= ========== ============ ============= ========= ========== ========
Transfer of shares from
share plans to employees - - - 1,439 - (1,439) -
================================= ========= ========== ============ ============= ========= ========== ========
Acquisition of own shares - - - (1,277) - - (1,277)
================================= ========= ========== ============ ============= ========= ========== ========
Credit to equity for
equity-settled
share-based payments - - - - - 775 775
================================= ========= ========== ============ ============= ========= ========== ========
Current tax on share-based
payments - - - - - 7 7
================================= ========= ========== ============ ============= ========= ========== ========
Dividends paid - - - - - (2,485) (2,485)
At 31 December 2019 567 3,331 195 (5,436) (141) 26,142 24,658
================================= ========= ========== ============ ============= ========= ========== ========
Notes to the financial statements
1. Accounting policies
General information
Cenkos Securities plc is a public company limited by shares
incorporated in England, United Kingdom under the Companies Act
2006 (Company Registration No. 05210733). The financial information
contained within this announcement does not constitute statutory
accounts for the year ended 31 December 2019 within the meaning of
Section 434 of the Companies Act 2006, but is derived from those
audited accounts. The auditors reported on those accounts and their
report was unqualified and did not contain any statement under
section 498(2) or section 498(3) of the Companies Act 2006. The
statutory accounts for the year ended 31 December 2019 will be
delivered to the Registrar of Companies in due course. The annual
report and audited statutory accounts will be sent to shareholders
and will be made available to the public on the Company's website:
www.cenkos.com or, upon request, copies may be obtained from the
Company Secretary at the registered office of Cenkos Securities
plc, 6.7.8. Tokenhouse Yard, London, EC2R 7AS. The Company's Annual
General Meeting will be held on 25 June 2020.
The financial information contained within these financial
statements has been prepared on the historical cost
basis, except for the revaluation of certain financial
instruments.
Going concern
The Company's business activities, together with the factors
likely to affect its future development and performance, the
financial position of the Company, its cash flows, capital and
liquidity position are set out in the Strategic report in the
Annual Report.
Coronavirus ('COVID-19') was recognised as a pandemic by the
World Health Organization (WHO) on 11 March 2020. In response, the
governments of many countries, states, cities and other geographic
regions have taken preventative or protective actions, such as
imposing restrictions on travel and business operations and
advising or requiring individuals to limit or forego their time
outside of their homes. These actions have severely restricted the
level of economic activity around the world and impacted the health
of the financial markets. Cenkos responded to COVID-19 promptly by
enacting its business continuity plan and successfully implementing
a comprehensive remote working capability. These procedures are
working well and have enabled us to ensure both the wellbeing of
our staff and the ability to continue servicing our clients during
this period of uncertainty.
The full extent of the pandemic is, as of today, unknown and
there is a degree of uncertainty over what the impact on the
Company will be. However, since the pandemic was declared, Cenkos
has been appointed by several new clients and has completed a
number of secondary placing transactions, which could suggest a
period of increased activity as companies look to bolster their
balance sheets to tide them over the period of lockdown.
Alternatively, the recent significant decline in asset prices may
dissuade companies from approaching the markets to raise further
capital, leading to a period of inactivity. Whilst it is not
possible to quantify the overall impact of COVID-19, as described
above, if it were to lead to a period of inactivity this would most
likely lead to a reduction in fees generated from placing and
corporate finance and a decline in fair values of listed equities,
options and warrants as observed in March 2020. Management
continues to monitor the impact of the COVID-19 pandemic on the
Company and the financial markets.
In order to mitigate the risk associated with fluctuations in
the financial markets, the Company operates a flexible business
model which links risk adjusted variable remuneration to corporate
performance. Fixed costs are kept low and controlled and, in
addition, the review of overheads conducted in 2019 has resulted in
a significantly reduced fixed cost base going forward, so providing
an even stronger foundation. Cenkos is not reliant on external
borrowings but is funded entirely by share capital and retained
earnings. The business is not capitally intensive. The trading book
is tightly controlled by book limits and, apart from shares
received in lieu of fees, is held for market making purposes or to
facilitate client business. Cenkos has a positive cash cycle and
does not run any liquidity mismatches. Cash is the largest asset on
the statement of financial position and consequently its exposure
to credit risk is largely due to its bank deposits before risk
weighting. As at 31 December 2019, capital resources in excess of
Pillar 1 regulatory capital requirements amounted to GBP13.5m
(2018: GBP11.2m) equating to a solvency ratio of 226% (2018:
183%).
Management has also performed an impact analysis as part of its
going concern assessment using information available to the date of
issue of these financial statements. As part of this analysis, a
number of adverse scenarios have been modelled to assess the
potential impact on the Company's revenue streams, in particular
corporate finance fees and on asset values, liquidity and capital
adequacy. In addition, a reverse stress test has been modelled to
assess the stresses the balance sheet has to endure before there is
a breach of the relevant regulatory capital requirement or
insufficient cash resources and including an assessment of any
relevant mitigations management has within their control to
implement. Having performed this analysis, management believes
regulatory capital requirements continue to be met and the Company
has sufficient liquidity to meet its liabilities for the next 12
months and that the preparation of the financial statements on a
going concern basis remains appropriate as the Company expects to
be able to meet its obligations, as and when they fall due, for the
foreseeable future.
Basis of accounting
The Company's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS") and
International Financial Reporting Interpretations Committee
("IFRIC") interpretations adopted by the European Union, and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS, with the prior period being presented on the
same basis.
2. Dividends
Amounts recognised as distributions to equity holders in the
year:
2019 2018
GBP 000's GBP 000's
=========================================================== ========== ==========
Amounts recognised as distributions to equity holders
in the year:
=========================================================== ========== ==========
Final dividend for the year ended 31 December 2018
of 2.5p (2017: 4.5p) per share 1,398 2,484
=========================================================== ========== ==========
Interim dividend for the period to 30 June 2019 of
2.0p (June 2018: 2.0p) per share 1,087 1,089
----------------------------------------------------------- ========== ==========
2,485 3,573
------------------------------------------------------- ---------- ----------
A final dividend of 1.0p per share has been proposed for the
year ended 31 December 2019 (2018: 2.5p). The proposed final
dividend is subject to approval at the Annual General Meeting and
is not recognised as a liability as at 31 December 2019. The final
dividend will be paid on 2 July 2020 to the shareholders on the
register at 5 June 2020, subject to approval at the Annual General
Meeting to be held on 25 June 2020.
3. Events after the reporting period
COVID-19 is considered to be a non-adjusting post balance sheet
event and, as such, there is no financial impact on the financial
statements as at 31 December 2019. For further discussion
concerning the Management's assessment the impact of COVID-19 on
the Company, refer to the Going Concern section in note 1
Accounting Policies.
4. Market abuse regulation (MAR) disclosure
Certain information contained in this announcement would have
been deemed to be inside information for the purposes of article 7
of Regulation (EU) No 596/2014 until the release of this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FZGZDMLZGGZZ
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