2024
FULL YEAR RESULTS
15 JULY 2024: Cavendish Financial plc
(together with its subsidiary undertakings, "Cavendish" or the
"Group") today announces full year results for the period ended 31
March 2024.
JULIAN MORSE AND JOHN FARRUGIA, CO-CHIEF EXECUTIVE OFFICERS AT
CAVENDISH, SAID:
"Since merging in September last
year, our business has performed strongly with H2 revenue of £35m,
80% higher than H1 on a combined basis. The business has
continued to operate well through the first quarter of the new
financial year, demonstrating the strength of our diversified
offering and broad client base, in what remains a challenging
market.
We continue to win high quality
mandates and have executed transactions worth c£2.5 billion across
all divisions in the nine months since the merger. Despite the
significant one-off costs of merger, our cash balance at March 31
was £21m. This solid position, a strong second half and a good
start to the new financial year has enabled the board to recommend
the resumption of dividend payments with the prospect of further
returns in the current year.
We believe Cavendish's strong
performance reflects our wide-ranging technical and sector
expertise which enables us to tailor optimal solutions for our
clients. Through the merger we have created a platform which has
been profitable in the second half and generated cash in a
challenging market. We are therefore well positioned to capitalise
on improving market conditions when they come. We continue to make
strategic hires in a number of areas to strengthen our offering and
explore wider opportunities to grow our business."
STRONG POST-MERGER PERFORMANCE
•
Revenues of £35m in H2, 80% higher than in H1 (on a combined
basis).
•
Appointed by 13 new quoted clients and executed over 120
transactions.
•
£7m annualised cost synergies delivered on schedule.
•
Strong balance sheet position with cash of £20.7m on 31 March
2024.
•
Healthy transaction pipeline.
FINANCIAL OVERVIEW(2)
Consolidated results include the
results of Cenkos from 7 September 2023.
•
Consolidated revenue: £48.0m (FY23: £32.8m), +46%.
•
Operating loss: £3.9m (FY23: loss £1.9m).
•
Adjusted Operating loss: £1.7m (FY23: loss £1.7m)
(3).
•
Loss per share: 1.40p (FY23: 3.25p).
•
Adjusted loss per share: 0.65p (FY23 0.94p).
•
Dividend 0.25p (FY23 1.15p).
OUTLOOK
The business is performing well in
the new financial year, with deal flow balanced across ECM, Public
and Private M&A, Debt Advisory and Private Growth
Capital. As we look ahead, we see many reasons to be
positive, including continued equity issuance, private and public
M&A, further client wins and a number of emerging IPO
opportunities as companies seek to join the UK markets.
Clearly there remain uncertainties and macro issues which impact
market sentiment, but with our well diversified offering and robust
platform we look forward to returning to a profitable year as the
merger synergies are fully realised and with that the compensation
ratio returning to normal levels.
CONTACTS
Cavendish
(Management)
Tel: +44 (0) 20 7220 0500
Julian Morse, Co-Chief Executive
Officer
investor.relations@cavendish.com
John Farrugia, Co-Chief Executive
Officer
Ben Procter, Chief Financial
Officer
Spark Advisory Partners (Nominated
Adviser)
Tel: +44 (0) 203 368 3550
Matt Davis/Adam Dawes
Cavendish (Broker)
Tel:
+44 (0) 20 7220 0500
Tim Redfern
Hudson Sandler (PR adviser)
Tel: +44 (0) 20 7796 4133
Dan de Belder/Rebekah
Chapman
(1) Basis of
preparation: the results for the year to 31 March 2024 include the
consolidation of the results for Cavendish Securities plc
(previously Cenkos Securities plc) from completion of its merger
with finnCap Group plc for the period from 7 September 2023
.
(2) Provides a
consistent measure of the profits from the core business
activities. Calculated excluding share-based payments,
non-recurring incomes from the revaluation of options held, share
of associate and joint venture profits and non-recurring costs from
the acquisition of Cavendish Securities plc (previously Cenkos
Securities plc).
The information contained within this
announcement is deemed to constitute inside information as
stipulated under the retained EU law version of the Market Abuse
Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law
by virtue of the European Union (Withdrawal) Act 2018. The
information is disclosed in accordance with the Company's
obligations under Article 17 of the UK MAR. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
BUSINESS REVIEW
The past 12 months have been
transformative for our Group. Against a challenging operating
and economic environment, we have created a leading full-service
investment bank.
At the start of our financial year,
we announced our intention to merge finnCap Group plc and Cenkos
Securities plc, completed the process in September 2023 and
implemented a fast operational integration. We rebranded the
Group as Cavendish, giving a new identity which reflects our
strength and capability to provide a comprehensive range of
investment banking services, supporting our clients throughout
their entire growth cycle.
Following the announcement of our
merger, we worked hard to ensure the combination was seamless,
whilst maintaining high quality client service and transaction
execution. Careful planning, clear operational design and
disciplined cost control allowed us to save £7 million on an
annualised basis whilst creating a robust and scalable
platform. This cost-efficient model has created a profitable
and cash generating foundation which is well positioned to
capitalise on market growth. The reported loss for the year
reflects the decision we made to pay bonuses to reward and retain
staff following a strong post-merger performance.
CAPITAL MARKET REFORMS
The previous Chancellor outlined
reforms to boost pensions and increase investment in British
businesses in his Mansion House speech in July 2023 that could
unlock up to £50bn for high growth companies by 2030.
All the signs are that the new Labour
Government will support the reforms being proposed. It is vital
that everyone involved in the Mansion House Compact recognises that
the AIM Market qualifies for inclusion in the proposed pension
allocations to private and unlisted assets. To ignore AIM would be
to ignore the key market for UK growth companies.
MARKET CONDITIONS
The AIM All Share index fell 8% in
the 12-month period to 31 March 2024, underperforming the larger
cap FTSE100, which gained 4%. High interest rates have challenged
equity flows. Data from the Investment Association pointed to £13bn
of retail selling of UK equities in the year, marking an
unprecedented 32 months of consecutive equity outflows. UK smaller
companies experienced over £1bn of outflows, bringing the
cumulative selling to £2.7bn in the 3 years to end of
March.
While heavy retail selling of UK
equities continued in April, indications are that this eased in
May. The shift in rate expectations this year has also not helped
with the market still pricing in rates to remain at 4.5%.
However, even though rate cuts have been pushed back, we have now
seen the peak in interest rates and the conclusion of the general
election has removed political uncertainty. This more stable
backdrop, together with the recent successful IPO of Raspberry Pi,
is positive for the new issue market.
REVENUE(3)
Revenue comprises regular retainer
income from corporate clients, advisory fees from public and
private market transactions and trading income from market making
and agency commission.
On a reported bases, revenue
increased by 46% reflecting the increase in scale of the equity
capital markets business following the merger.
|
|
Year ended
|
Year ended
|
|
|
31 March
2024
|
31 March
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Retainers
|
10,028
|
6,956
|
|
Transactions
|
33,512
|
22,632
|
|
Securities
|
4,548
|
3,276
|
|
Total revenue
|
48,088
|
32,864
|
OPERATING EXPENSES
|
|
Year ended
|
Year ended
|
|
|
31 March
2024
|
31 March
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Employee costs
|
34,964
|
22,680
|
|
Share based payments
|
1,747
|
577
|
|
Introducer fees
|
773
|
147
|
|
Non-employee costs
|
14,159
|
11,139
|
|
Administrative costs
|
51,643
|
34,543
|
Administrative costs, increased by
50% with employee costs rising overall by 54% due to the inclusion
of employees from Cavendish Securities plc (previously Cenkos
Securities plc) following the merger and an increase in variable
remuneration.
The combined Group has consolidated
its London operations into one location saving £1.3m per year,
migrated onto a single trading platform saving £0.8m per year and
reduced headcount saving £4.9m per year. Further smaller
savings are anticipated as licences for duplicated services come up
for renewal.
Employee costs as a percentage of
revenue were 73% (69% in FY23) reflecting bonuses awarded for
people's contributions to our strong post-merger
performance.
BOARD CHANGES
There have been several changes to
the Board's composition during the year. In connection with the
merger, Barbara Firth and Andy Hogarth stepped down as
Non-Executive Directors, and Geoff Nash stepped down as an
Executive Director (but remains with the business as a senior
Director in the Corporate Finance team). Lisa Gordon (Chair),
Julian Morse (Co-CEO), Ben Procter (CFO) and Jeremy Miller
(Non-Executive Director) all joined the Board on the merger
effective date. Robert Lister stepped down as a Non-Executive
Director on 31 December, and we welcomed Mark Astaire to the Board
as a Non-Executive Director on 1 January 2024. Since the year-end,
Richard Snow (who remained on the Board as Chief Operational
Officer following the merger) has signalled his intention to step
down from the Board at the end of July. Most recently Annette
Andrews has informed us of her decision not to stand for
re-election at the AGM on 16 September 2024.
NON-RECURRING COSTS
|
|
Year ended
|
Year ended
|
|
|
31 March
2024
|
31 March
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Negative goodwill
|
(5,771)
|
-
|
|
Onerous contracts
|
2,563
|
-
|
|
Group restructuring costs
|
2,026
|
3,247
|
|
Transaction costs
|
1,234
|
411
|
|
Total non-recurring items
|
52
|
3,658
|
Negative goodwill reflects the
difference between of the fair value of Cavendish Securities plc's
(previously Cenkos Securities plc's) net assets at merger and the
fair value of consideration for the purchase. Onerous contracts
reflect the write down of the property no longer occupied and
redundant IT systems. Group restructuring is the cost of the
headcount reduction programme and Transaction costs cover the
advisory and execution fees relating to the
merger.
Overall, the direct costs of the
merger are estimated to be c.£3.8m (group restructuring and
transaction costs) including £0.5m incurred by Cavendish Securities
plc (previously Cenkos Securities plc) prior to the merger. The
overall annualised savings for the Group will be more than
£7.0m.
CONSOLIDATED INCOME STATEMENT
|
|
Year ended
|
Year ended
|
|
|
31 March
2024
|
31 March
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Revenue
|
48,088
|
32,864
|
|
Other operating expenses
|
(293)
|
(214)
|
|
Administrative expenses
|
(51,643)
|
(34,543)
|
|
Operating loss before non-recurring items
|
(3,848)
|
(1,893)
|
|
Non-recurring items
|
(52)
|
(3,658)
|
|
Operating loss before non-recurring items
|
(3,900)
|
(5,551)
|
|
Share of joint venture and associate
losses
|
(346)
|
(297)
|
|
Finance income
|
359
|
65
|
|
Finance charge
|
(425)
|
(502)
|
|
Loss before taxation
|
(4,312)
|
(6,285)
|
|
Taxation
|
766
|
767
|
|
Loss attributable to equity shareholders
|
(3,546)
|
(5,518)
|
|
Total comprehensive loss for the year
|
(3,546)
|
(5,518)
|
|
Loss per share (pence)
|
|
|
|
Basic
|
(1.40)
|
(3.25)
|
|
Diluted
|
(1.40)
|
(3.25)
|
There are no items of other
comprehensive income.
All results derive from continuing
operations.
CONSOLIDATED BALANCE SHEET
|
|
31 March
|
31 March
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
11,052
|
12,239
|
|
Intangible assets
|
13,436
|
13,492
|
|
Financial assets held at fair
value
|
538
|
404
|
|
Investment in associates and joint
ventures
|
1,982
|
2,106
|
|
Deferred tax asset
|
3,626
|
886
|
|
Total non-current assets
|
30,634
|
29,127
|
|
Current assets
|
|
|
|
Trade and other
receivables
|
22,714
|
12,736
|
|
Corporation taxation
receivable
|
-
|
450
|
|
Current assets held at fair
value
|
4,210
|
269
|
|
Cash and cash equivalents
|
20,739
|
9,382
|
|
Total current assets
|
47,663
|
22,837
|
|
Total assets
|
78,297
|
51,964
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
Trade and other payables
|
8,713
|
10,008
|
|
Borrowings
|
98
|
481
|
|
Provisions
|
82
|
29
|
|
Total non-current liabilities
|
8,893
|
10,518
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
29,398
|
14,632
|
|
Borrowings
|
386
|
843
|
|
Total current liabilities
|
29,784
|
15,475
|
|
Equity
|
|
|
|
Share capital
|
3,847
|
1,811
|
|
Share premium
|
3,099
|
1,716
|
|
Own shares held
|
(4,799)
|
(1,926)
|
|
EBT reserve
|
(274)
|
(294)
|
|
Merger relief reserve
|
25,151
|
10,482
|
|
Share based payments
reserve
|
3,766
|
1,771
|
|
Retained earnings
|
8,830
|
12,411
|
|
Total equity
|
39,620
|
25,971
|
|
Total equity and liabilities
|
78,297
|
51,964
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
Year ended
|
Year ended
|
|
|
|
31 March
2024
|
31 March
2023
|
|
|
|
£'000
|
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
Loss before taxation
|
|
(4,312)
|
(6,285)
|
|
Adjustments for:
|
|
|
|
|
Depreciation
|
|
1,899
|
1,789
|
|
Negative Goodwill
|
|
(5,771)
|
-
|
|
Onerous contracts
|
|
1,522
|
-
|
|
Amortisation of intangible
assets
|
|
157
|
60
|
|
Finance income
|
|
(359)
|
(65)
|
|
Finance charge
|
|
425
|
502
|
|
Share of associate
profits
|
|
346
|
297
|
|
Share based payments
charge
|
|
1,747
|
577
|
|
Net fair value losses recognised in
profit or loss
|
|
305
|
382
|
|
Payments received of non-cash
assets
|
|
(55)
|
(854)
|
|
|
|
(4,096)
|
(3,597)
|
|
Changes in working capital:
|
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
|
(1,796)
|
398
|
|
(Decrease)/increase in trade and
other payables
|
|
7,546
|
(5,951)
|
|
(Decrease)/increase in
provisions
|
|
53
|
(65)
|
|
Cash generated from operations
|
|
1,704
|
(9,215)
|
|
Net cash receipts /(payments) for
current asset investments
|
|
|
|
held at fair value through profit or
loss
|
|
(305)
|
602
|
|
Tax paid
|
|
256
|
(1,155)
|
|
Net
cash (outflow)/inflow from operating activities
|
|
1,655
|
(9,768)
|
|
Cash flows from investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(174)
|
(724)
|
|
Purchase of intangible
assets
|
|
(101)
|
(40)
|
|
Investment in associates and joint
ventures
|
|
(150)
|
(2,029)
|
|
Acquisition of Cavendish Securities
plc
|
|
11,576
|
-
|
|
Proceeds on sale of
investments
|
|
83
|
870
|
|
Interest received
|
|
359
|
65
|
|
Net
cash (outflow)/inflow from investing activities
|
|
11,593
|
(1,858)
|
|
Cash flows from financing activities
|
|
|
|
|
Equity dividends paid
|
|
-
|
(1,954)
|
|
Issue of share capital and exercise
of options
|
|
1,540
|
3
|
|
Interest paid
|
|
(34)
|
(38)
|
|
Lease liability payments
|
|
(2,557)
|
(1,555)
|
|
Net proceeds from
borrowings
|
|
(840)
|
117
|
|
Net
cash (outflow) from financing activities
|
|
(1,891)
|
(3,427)
|
|
Net (decrease)/increase in cash and
cash equivalents
|
11,357
|
(15,053)
|
|
Cash and cash equivalents at
beginning of year
|
|
9,382
|
24,435
|
|
Cash and cash equivalents at end of year
|
|
20,739
|
9,382
|
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting
policies
a. Basis of preparation
These consolidated and Parent Company
Financial Statements contain information about the Group and have
been prepared on a historical cost basis except for certain
Financial Instruments which are carried at fair value. Amounts are
rounded to the nearest thousand, unless otherwise stated and are
presented in pounds sterling, which is the currency of the primary
economic environment in which the Group operates.
These consolidated and Parent Company
Financial Statements have been prepared in accordance with UK
Adopted International Accounting Standards.
The preparation of Financial
Statements in compliance with adopted IFRS requires the use of
certain critical accounting estimates. It also requires Group
management to exercise judgement in applying the Group's accounting
policies.
The consolidated financial
information contained within these financial statements does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The auditor has reported on the
statutory financial statements and the audit report was
unqualified. The annual report and accounts for the year
ended 31 March 2024 is expected to be filed with the Registrar of
Companies and posted to Shareholders in August. Further
copies will be available from the Company Secretary at the
Company's registered office and on the Company's web-site
www.Cavendish.com.
b. Basis of consolidation
The Group's consolidated Financial
Statements include the Financial Statements of the Company and all
its subsidiaries. Subsidiaries are entities over which the Group
has control if all three of the following elements are present:
power over the investee, exposure to variable returns from the
investee and the ability of the investor to use its power to affect
those variable returns. Subsidiaries are fully consolidated from
the date on which control is established and de-consolidated on the
date that control ceases.
The acquisition method of accounting
is used for the acquisition of subsidiaries. Transactions and
balances between members of the Group are eliminated on
consolidation and consistent accounting policies are used
throughout the Group for the purposes of consolidation.
c. Going concern
The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Letter from the Chair.
The Strategic Report and Directors' Report describe the financial
position of the Group; the Group's objectives, policies and
processes for managing its capital; its financial risk management
objectives; and its exposure to credit risk and liquidity
risk.
As normal, the Company has assessed
the appropriateness of accounting on a going concern basis. This
process involved the review of a forecast for the coming 15 months,
along with stress testing a second downside scenario. Both cases
showed that the Group has the required resources to operate within
its resources during the period.
The Directors believe that the
Company has adequate resources to continue trading for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the Annual Report and
Accounts.
2.
Dividends
|
|
Year ended
|
Year ended
|
|
|
31 March
2024
|
31 March
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Dividends proposed and paid during
the year
|
-
|
1,954
|
|
Dividends per share
|
-p
|
1.15p
|
Dividends are declared at the
discretion of the Board.
The Board has proposed a final
dividend of 0.25p per share. The dividend, subject to approval at
the AGM, are expected to be paid on 15 October 2024 to shareholders
and on the register on 20 September 2024.
3.
Website
publication
The full Financial Statements are
included in our Annual Report and Accounts, which will be published
on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of
Financial Statements, which may vary from legislation in other
jurisdictions.