TIDMCNKS
RNS Number : 9521T
Cenkos Securities PLC
26 March 2019
26 March 2019
Cenkos Securities plc
Annual Results for the year ended 31 December 2018
Cenkos Securities plc (the "Company" or "Cenkos") and together
with its subsidiaries (the "Group" or the "Firm"), today announces
its results for the year ended 31 December 2018. 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-18 31-Dec-17
---------------------------------------------------- ---------- ----------
GBP45.0 GBP59.5
Revenue m m
GBP10.0
Profit before tax on continuing operations GBP3.2 m m
Profit after tax on continuing and discontinued
operations GBP2.3m GBP7.2m
GBP33.6 GBP36.8
Cash m m
Net assets GBP27.6m GBP29.7m
Basic and diluted earnings per share on continuing
and discontinued operations 4.2 p 13.2 p
Full year dividend per share paid and proposed
(1) 4.5 p 9.0 p
(1) Includes a proposed final dividend of 2.5p (2017: 4.5p)
Since being admitted to trading on AIM in 2006, the Company has
returned GBP111.6 million of cash to shareholders, equivalent to
171.8p per share, before the payment of the proposed 2018 final
dividend of 2.5p per share.
Commenting the Company's Chief Executive Officer, Anthony Hotson
said:
"We have had a better start to 2019 than the same time last
year. The pipeline of significant transactions in our business
remains strong. Consequently, we look forward to the current year
with optimism."
For further information contact:
Cenkos Securities plc
Anthony Hotson - Chief Executive +44 20 7397
Officer 8900
Nominated Adviser
Spark Advisory Partners Limited
Matthew Davis +44 20 3368 3550
Broker
Whitman Howard
Nick Lovering +44 20 7659 1224
Public Relations
Buchanan Communications
David Rydell +44 20 7466 5066
Chief Executive's Statement
"Our corporate client base remains solid, reflecting our ethos
of building and developing long-term relationships. Delivering good
client outcomes lies at the heart of the Firm."
Anthony Hotson Chief Executive Officer
This year's Annual Report is my second, as your Chief Executive
following my appointment in August 2017 after serving as a
Non-executive Director since 2012. Having carried out and delivered
business reviews in the front and back office, the company is now
in a stronger position to address the commercial challenges ahead.
It has a simpler management structure and a more robust three lines
of defence compliance model which will help with the forthcoming
implementation of the Senior Managers & Certification Regime
("SM&CR"). We completed the acquisition of the nominated
adviser business of Smith & Williamson LLP during the year. I
look forward to handing over the leadership of Cenkos to a new
Chief Executive in the near future who I expect will build upon
Cenkos' strengths and deliver growth for all our stakeholders.
Dividend
We propose a final dividend of 2.5p per share (2017: 4.5p per
share) which brings the total dividend for the year to 4.5p per
share (2017: 9.0p per share). Since we have been admitted to
trading on AIM in 2006 we have returned GBP111.6 million of cash to
shareholders, equivalent to 171.8p per share, before the payment of
the proposed 2018 final dividend of 2.5p per share.
Performance
Cenkos has had a challenging year, delivering revenues, profit
and dividends well behind 2017, albeit in line with the results
achieved in 2016. After generating GBP18.1m of revenue in H1 2018,
we are pleased to report that performance in the second half
improved leading to full year revenues of GBP45.0m. Revenues,
dominated by placing and corporate finance fees, have been
generated across the Firm in reasonable numbers but with an absence
of the larger deals that took place in 2017. Profits have been
impacted by the implementation costs and consequences of the
Markets in Financial Instruments Directive II (MiFID II) together
with restructuring costs following the implementation of business
reviews of the front and back office.
We have helped our clients raise GBP1.2bn (2017: GBP2.5bn) of
equity finance. Our corporate client base remains solid, reflecting
our ethos of building and developing long-term relationships.
Delivering good client outcomes lies at the heart of the Firm.
The key performance indicators we use to assess our performance
include both financial and non-financial indicators and signpost
the Board's strategy which is set out in the Annual Report.
Brexit, the economy and regulatory environment
Political uncertainty and macro-economic factors have disrupted
confidence in 2018 and continue to do so in 2019. The Board is
mindful of these risks and they have been reflected in the Firm's
assessment of principal risks.
Regulatory obligations in the financial sector increased in 2018
with the implementation of MiFID II. Whilst this implementation has
gone well, there has been a fall-off in research revenues as
"buy-side" demand for paid research has been eroded. The decline in
research revenues is set to continue in 2019 as the market
adjusts.
This pace of regulatory change will be sustained in 2019 with
the implementation of the SM&CR. Whilst it is early days, I am
pleased to note that actions taken from our front and back-office
reviews over the last eighteen months have put the Firm in a solid
position to deliver against the requirements of SM&CR.
Along with other firms, we continue to invest in people, systems
and technology to meet the requirements of new regulation and
legislation. Last year we reported the Firm had initiated the
introduction of a new operating model for the compliance team. This
new model has been completed and, following Philip Anderson's
departure later in the year, this provides the opportunity for a
new Head of Compliance to refine the model further upon
arrival.
We believe that all regulation must be accompanied by a strong
internal culture underpinned by the highest ethical and
professional standards. Whilst an overarching governance framework
is critical, with the highest standards being set by the Board as a
role model, ultimately individuals must take responsibility for the
way in which they conduct business and work with colleagues. This
ethos lies at the heart of SM&CR. Details of our governance
framework are set out in the Annual Report.
The Board
Several changes to the Board were announced in 2018. On 5
November 2018, Gerry Aherne retired as Chairman after six years in
the position. Jeff Hewitt, Non-executive Chairman of the Audit,
Risk and Compliance Committee, was appointed acting Chairman.
Subject to regulatory approval being received Jeremy Miller will be
appointed as a Non-executive Director and also to the position of
Chairman of the Audit, Risk and Compliance Committee.
Two further changes took place in the year. I announced my
intention to step down from the Board as soon a suitable successor
has received regulatory approval. On 12 December 2018, Philip
Anderson (Finance Director and Head of Compliance) announced his
intention to step down from the Board on 31 March 2019. He will
continue as Head of Compliance until a suitable successor is
appointed and has received regulatory approval. Philip has
supported me in the front and back office reviews and redesigned
the Firm's three lines of defence compliance model. I would echo
the Board's thanks to Philip Anderson for the work he carried out
on the Cenkos business model and in preparing the foundations for
the Firm's compliance with SM&CR.
People
The reputation of our business is reliant on the quality,
expertise, professionalism and conduct of every person in the Firm.
Our teams always set out to deliver outstanding client outcomes.
The Board and management is focused on retaining and developing a
pool of diversified talent with a shared set of values and
strategic goals. On behalf of the Board, I would like to thank our
employees for their contribution in 2018.
Outlook
We continue to live in uncertain times where the geopolitical
environment makes it very difficult to predict either the direction
of the markets or health of investor sentiment. This situation is
being further exacerbated by the uncertainties around Brexit.
In 2018, market volatility appears to have had a negative impact
on investor sentiment. This climate is likely to persist through
2019 and the Board have factored this into the Firm's plans in
2019. Notwithstanding this, we remain ranked as one of the leading
brokers in London for growth companies and the Cenkos business
model is resilient and well capitalised.
We have had a better start to 2019 than the same time last year.
The pipeline of significant transactions in our business remains
strong. Consequently, we look forward to the current year with
optimism.
Consolidated income statement
For the year ended 31 December 2018
2018 2017
GBP 000's GBP 000's
---------------------------------------------------- -------------- --------------
Continuing operations
Revenue 44,953 59,504
Administrative expenses (41,902) (49,528)
----------------------------------------------------- -------------- --------------
Operating profit 3,051 9,976
Investment income - interest receivable 103 23
----------------------------------------------------- -------------- --------------
Profit before tax from continuing operations
for the year 3,154 9,999
Tax (805) (1,815)
----------------------------------------------------- -------------- --------------
Profit after tax from continuing operations for
the year 2,349 8,184
Discontinued operations
Loss after tax from discontinued operations for
the year - (973)
----------------------------------------------------- -------------- --------------
Profit for the year 2,349 7,211
----------------------------------------------------- -------------- --------------
Attributable to:
Equity holders of Cenkos Securities plc 2,349 7,211
----------------------------------------------------- -------------- --------------
From continuing operations
Basic and diluted earnings per share 4.2p 15.0p
From continuing and discontinued operations
Basic and diluted earnings per share 4.2p 13.2p
----------------------------------------------------- -------------- --------------
Consolidated statement of comprehensive income
For the year ended 31 December 2018
2018 2017
GBP 000's GBP 000's
-------------------------------------------------------------- ---------- ----------
Profit for the year 2,349 7,211
Amounts that will not be recycled to income statement in
future periods
Loss on FVOCI financial assets (180) (133)
Tax on FVOCI financial assets 29 26
Exchange differences on translation of foreign operations - (105)
-------------------------------------------------------------- ---------- ----------
Other comprehensive loss for the year (151) (212)
-------------------------------------------------------------- ---------- ----------
Total comprehensive income for the year 2,198 6,999
-------------------------------------------------------------- ---------- ----------
Attributable to:
Equity holders of Cenkos Securities plc 2,198 6,999
-------------------------------------------------------------- ---------- ----------
Consolidated statement of financial position
As at 31 December 2018
2018 2017
GBP 000's GBP 000's
---------------------------------------- ---------- ----------
Non-current assets
Property, plant and equipment 558 525
Intangible asset 100 -
Deferred tax asset 520 738
----------------------------------------- ---------- ----------
1,178 1,263
Current assets
Trade and other receivables 18,831 20,798
FVOCI financial assets 220 250
Other current financial assets 12,648 10,615
Cash at bank 33,635 36,829
----------------------------------------- ---------- ----------
65,334 68,492
---------------------------------------- ---------- ----------
Total assets 66,512 69,755
----------------------------------------- ---------- ----------
Current liabilities
Trade and other payables (32,640) (36,300)
Other current financial liabilities (6,018) (3,341)
----------------------------------------- ---------- ----------
(38,658) (39,641)
---------------------------------------- ---------- ----------
Net current assets 26,676 28,851
Non-current liabilities
Trade and other payables (263) (366)
----------------------------------------- ---------- ----------
Total liabilities (38,921) (40,007)
----------------------------------------- ---------- ----------
Net assets 27,591 29,748
----------------------------------------- ---------- ----------
Equity
Share capital 567 567
Share premium 3,331 3,331
Capital redemption reserve 195 195
Own shares (5,663) (3,845)
FVOCI reserve (93) 58
Retained earnings 29,254 29,442
----------------------------------------- ---------- ----------
Total equity 27,591 29,748
----------------------------------------- ---------- ----------
Consolidated cash flow statement
For the year ended 31 December 2018
2018 2017
GBP 000's GBP 000's
---------------------------------------------------- ---------- ----------
Profit for the year 2,349 7,211
Adjustments for:
Net finance income (103) (23)
Tax expense 805 1,815
Depreciation of property, plant and equipment 247 242
Shares and options received in lieu of fees (1,970) (3,888)
Share-based payment expense 1,852 1,560
----------------------------------------------------- ---------- ----------
Operating cash flows before movements in
working capital 3,180 6,917
Decrease in net trading investments and FVOCI
financial assets 2,492 7,908
Decrease in trade and other receivables 1,983 3,623
(Decrease)/increase in trade and other payables (3,029) 1,959
----------------------------------------------------- ---------- ----------
Net cash flow from operating activities before
interest and tax paid 4,624 20,407
Tax paid (1,664) (1,334)
----------------------------------------------------- ---------- ----------
Net cash flow from operating activities 2,960 19,073
Investing activities
Interest received 90 23
Purchase of property, plant and equipment (280) (378)
Acquisition of Nomad business (100) -
Net cash outflow from investing activities (290) (355)
Financing activities
Dividends paid (3,573) (5,201)
Proceeds from sale of own shares to employee
share plans 62 66
Acquisition of own shares (2,353) (549)
Net cash used in financing activities (5,864) (5,684)
----------------------------------------------------- ---------- ----------
Net (decrease)/increase in cash at bank (3,194) 13,034
----------------------------------------------------- ---------- ----------
Cash at bank at beginning of year 36,829 23,795
----------------------------------------------------- ---------- ----------
Cash at bank at end of year 33,635 36,829
----------------------------------------------------- ---------- ----------
Consolidated statement of changes in equity
For the year ended 31 December 2018
Equity attributable to equity holders of the Parent
----------------- ---------------------------------------------------------------------------------------------------
Foreign
Capital currency
Share Share redemption Own FVOCI translation Retained
capital premium reserve shares reserve reserve earnings Total
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
----------------- ---------- ---------- ----------- ---------- ---------- ------------ ---------- ----------
At 1 January 2017 567 3,331 195 (3,556) 165 105 26,376 27,183
Profit for the
year - - - - - - 7,211 7,211
Loss on FVOCI
financial assets
net of tax - - - - (107) - - (107)
Exchange
differences on
translation of
foreign
operations - - - - - (105) - (105)
----------------- ---------- ---------- ----------- ---------- ---------- ------------ ---------- ----------
Total
comprehensive
income for
the year - - - - (107) (105) 7,211 6,999
Transfer of
shares to
employee share
plans - - - 66 - - 66
Transfer of
shares from
share plans to
employees - - - 194 - - (194) -
Acquisition of
own shares by
EBT - - - (549) - - - (549)
Credit to equity
for
equity-settled
share-based
payments - - - - - - 1,250 1,250
Dividends paid - - - - - - (5,201) (5,201)
----------------- ---------- ---------- ----------- ---------- ---------- ------------ ---------- ----------
At 31 December
2017 567 3,331 195 (3,845) 58 - 29,442 29,748
----------------- ---------- ---------- ----------- ---------- ---------- ------------ ---------- ----------
Profit for the
year - - - - - - 2,349 2,349
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) - 2,372 2,221
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 567 3,331 195 (5,663) (93) - 29,254 27,591
----------------- ---------- ---------- ----------- ---------- ---------- ------------ ---------- ----------
Notes to the consolidated financial statements
1. Accounting policies
General information
The consolidated financial information contained within this
announcement does not constitute statutory accounts for the year
ended 31 December 2018 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 2018 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 15 May 2019.
The consolidated 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 Group's business 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 are set out in the Strategic Report. The financial
statements of the Group have been prepared on a going concern basis
as the Directors have satisfied themselves that, at the time of
approving the financial statements and having taken into
consideration the strength of the Group's statement of financial
position and cash balances, the Group has adequate resources to
continue in operational existence for at least the next 12 months
from the signing of these financial statements.
Basis of accounting
The consolidated financial information contained within these
financial statements has been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union (EU) and in accordance with International
Financial Reporting Interpretations Committee (IFRIC)
interpretations and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS, and are in accordance
with the accounting policies that were applied in the Group's
statutory accounts for the year ended 31 December 2018.
2. Dividends
2018 2017
Amounts recognised as distributions to equity holders
in the year: GBP 000's GBP 000's
------------------------------------------------------------- ---------------- ----------
Final dividend for the year ended 31 December 2017 of
4.5p (2016: 5.0p) per share 2,484 2,743
Interim dividend for the period to 30 June 2018 of 2.0p
(June 2017: 4.5p) per share 1,089 2,458
3,573 5,201
A final dividend of 2.5p per share has been proposed for the year ended
31 December 2018 (2017: 4.5p). The proposed final dividend is subject
to approval at the Annual General Meeting and is not recognised as a
liability as at 31 December 2018. Under the Compensatory Award Plan
2009 ("CAP"), the payment of a dividend to ordinary shareholders will
trigger a cash payment to holders of options under the CAP. The payment
of the final dividend will increase staff costs by GBP0.3 million in
the first half of 2019 (2017: final dividend of 4.5p increased staff
costs by GBP0.52 million in the first half of 2018). The final dividend
will be paid on 31 May 2019 to the shareholders on the register at 3
May 2019, subject to approval at the Annual General Meeting to be held
on 15 May 2019.
3. Events after the reporting period
There were no material events to report on that occurred between
31 December 2018 and the date at which the Directors signed the
Annual Report.
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
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