TIDMCAV
RNS Number : 2177X
Cavendish Financial PLC
19 December 2023
Cavendish Financial plc
2024 Interim Results
19 DECEMBER 2023: Cavendish Financial plc (together with its
subsidiary undertakings, "Cavendish" or the "Group") today
announces unaudited interim results for the period ended 30
September 2023.
Julian Morse and John Farrugia, Co-Chief Executive Officers at
Cavendish, said:
"We are delighted with the progress our teams have made in the
short time since the merger in September. Careful planning enabled
rapid business integration, unlocking GBP7m of cost synergies, more
quickly than we originally forecast.
We are already winning clients and have executed over 20
transactions across all divisions since coming together. Despite
the significant one-off costs of merger, our cash balance had risen
to GBP17m on 30 November.
Perhaps most pleasing has been the positive feedback received
from existing clients, with us achieving our goal of providing
enhanced service through our much deeper resource, efficient
business model and renewed energy. Whilst we intend to make
strategic hires, our teams are settled and we are well positioned
to benefit from improving market conditions when they come."
CAVISH - A LEADING UK MID-MARKET INVESTMENT BANK
-- Merger of finnCap Group plc ("finnCap") and Cenkos Securities
plc ("Cenkos") legally effective on 7 September 2023
-- Creation of Cavendish, the clear no.1 AIM adviser with over
200 retained corporate clients, serviced by enlarged sector focused
teams.
-- Wide product expertise across ECM, private and public M&A, debt advisory and private capital
-- Enhanced corporate broking, distribution and equity research offering for all clients
-- Pro forma revenue to 30 September 2023: GBP19.5m (H1 FY23: GBP23.3m)
STRONG POST-MERGER PERFORMANCE(1)
-- GBP7m annualised cost synergies locked in, ahead of and quicker than our pre-merger plans
-- Effective pre-planning and the subsequent rapid integration
of teams, systems and processes has enabled uninterrupted focus on
client service
-- Since completion, Cavendish has been appointed by 3 new premium listed clients.
-- Over 20 transactions already executed together since becoming the combined group.
BOARD APPOINTMENT
-- Appointment of Mark Astaire - former Vice Chairman of
Investment Banking and Chairman of Corporate Broking of Barclays
Investment Bank as an independent Non-Executive Director
Capital Strength for investment and challenging market
conditions
Post integration costs, the Group has substantial regulatory
capital and liquidity. After merger costs, dividend and bonus
payments, cash at 30 September 2023 was GBP12.3m. Cash has risen to
GBP17m at 30 November 2023, driven by the completion of over 20
transactions in the period.
FINANCIAL OVERVIEW(2)
-- Consolidated results include the results of Cenkos from 7 September 2023.
-- Consolidated revenue: GBP13.4m (H1 FY23: GBP16.4m) reflecting
lower ECM and private M&A activity during the summer months
across the UK markets.
-- Operating loss: GBP2.0m (H1 FY23: loss GBP2.3m)
-- Adjusted loss before tax: GBP3.6m (H1 FY23: loss GBP0.5m), see note 9.
-- Loss per share: 0.7p (H1 FY23: loss per share 1.8p)
OUTLOOK
The current interest rate upcycle appears to be nearing
completion, but inflationary pressures, although reduced, remain a
risk. With relatively higher yields available to investors on cash
deposits we continue to see a drag on market demand for UK growth
equity. This has continued to adversely impact equity transactions
and trading, but private and public M&A activity remains
resilient. The breadth of the service offering was a key driver for
the merger, putting us in a strong position to weather market
conditions. Post-merger enhancements in winning and executing
business allied to a tentative pick up of the markets in the last
three months has enabled us to get off to a good start in the
second half. We look forward to building on this momentum,
underpinned by a good pipeline, lower overheads and a strong cash
position.
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
Grant Thornton (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Philip Secrett/Samantha Harrison
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) Post-merger performance covers the period from 7 September
2023 to 30 November 2023.
(2) Basis of preparation: the results for the six months to 30
September 2023 includes the consolidation of the results for Cenkos
Securities plc from completion of its merger with finnCap Group plc
for the period from 7 September 2023.
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
On 7 September 2023, having received FCA approval, we completed
the merger between Cenkos and finnCap creating Cavendish, a new
leading UK Investment Bank focused on the mid-market and servicing
over 200 retained clients.
Since the merger we have been actively engaging with our clients
to discuss the Group's wider range of sector and product expertise
to support their growth ambitions, and it has been pleasing to
receive positive feedback from clients noting enhanced service
levels from the significantly enlarged team.
Taking best practices from across the combined firm has already
improved our service offering, both in terms of our day-to-day
client engagement and how we work together on transactions.
Within a few weeks of working together we were already winning
new clients and mandates and we continue to make good progress
across the group. We have integrated our client facing teams and
continue to add talent where we see opportunities. At the same time
we have implemented our headcount cost reduction where there was
duplication and put in place our non-people cost reduction
programme, which has resulted in delivering cost synergies of over
GBP7m, in excess of our pre-merger target. We are now making
selective hires, recruiting additional talent to allow us to grow
the business as market conditions ease.
Our first half results only reflect the combined group for 3
weeks of the reporting period. On a pro forma combined basis from 1
April 2023, we generated revenues of GBP19.5m, before leveraging
the benefits of our combined expertise and enhanced service
offering.
At the end of the period, we had net assets of GBP39.4m and cash
of GBP12.3m which has improved substantially since the half year
end reflecting good deal activity.
MARKET CONDITIONS
Persistent inflationary pressure and associated interest rate
rises continued to hamper investment in the equity of UK quoted
growth companies across the period, reflected in the 11% decrease
in the FTSE AIM All Share Index in the period and by far the lowest
levels of new and secondary fund raising in the last twenty years.
In M&A, public company take-over activity is perhaps the
strongest we have seen and, although private equity buyers remain
cash rich, the UK economic environment is impacting on deal
timetables.
INVESTMENT BANKING REVENUE (3)
Investment Banking revenue comprises regular retainer income
from corporate clients and advisory fees earned from ECM, M&A,
debt and private placings.
On a reported bases, revenue declined by 18% reflecting the
impact of weaker ECM and M&A market conditions over the summer
months. On a pro forma basis Investment Banking revenues of
GBP16.8m were 19% less than in the prior period.
Despite the challenges of market conditions and managing the
complexities of the merger, we have protected our income from
client retainers and executed a number of client transactions,
albeit at lower levels, in both the private M&A and Equity
Capital Markets.
Pro forma Reported
6 months 6 months 6 months 6 months
ended ended ended ended
30 Sep 2023 30 Sep 2022 30 Sep 2023 30 Sep 2022
GBP'000 GBP'000 GBP'000 GBP'000
Corporate Retainers 6,471 6,203 3,914 3,452
Advisory Fees 10,287 14,522 8,019 10,983
--------------------- ------------ ------------ ------------ ------------
Investment Banking
Revenue 16,758 20,725 11,933 14,435
--------------------- ------------ ------------ ------------ ------------
EQUITIES REVENUE (3)
Weaker equity issuance and investor demand for UK equities did
not detract from the proactive engagement with institutional
clients and the quality of service we delivered, but did reduce
market making profits and commission in the period.
Pro forma Reported
6 months 6 months 6 months 6 months
ended ended ended ended
30 Sep 2023 30 Sep 2022 30 Sep 2023 30 Sep 2022
GBP'000 GBP'000 GBP'000 GBP'000
Equities Revenue 2,768 2,581 1,432 1,917
------------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Both firms maintained rigorous cost controls ahead of the
merger. Merger related advisory and severance costs are materially
behind us. Most of the targeted GBP7m reduction in annualised
operating costs, from co-locating and eliminating duplicate roles
and support services, has already been achieved.
We are now focused on firmwide cost controls, automation and
outsourcing to further reduce our cost base.
Reported
6 months
ended 6 months ended
30 Sep 2023 30 Sep 2022
Unaudited Unaudited
GBP'000 GBP'000
Employee benefit
expense 11,855 11,329
Non-employee costs 5,663 5,728
Total administrative
expenses 17,518 17,057
-------------------------------- ----------------- ------------ ---------------
On a reported basis, excluding the incremental operating costs
arising from the merger, the change in administration costs
reflects the benefit of the cost reduction programme implemented in
the finnCap Group in Q3 of FY23 with staff and administration costs
being in line with our expectations.
SHAREHOLDER REMUNERATION
The Board is committed to delivering returns for our
shareholders. If we can build on our strong post-merger performance
we will consider dividend payments with the full year results.
BOARD CHANGES
A separate announcement regarding proposed changes to the Board
has been issued today.
NON-RECURRING COSTS
Pro forma Reported Reported
6 months 6 months
ended 6 months ended ended
30 September 30 September 30 September
2023 2023 2022
GBP'000 GBP'000 GBP'000
Negative goodwill (5,771) (5,771) -
Onerous contracts 1,811 1,811 -
Group restructuring 1,031 620 1,255
Transaction costs 1,335 1,115 189
Non-recurring
items (1,594) (2,225) 1,444
--------------------------- --------- ------------- --------------- -------------
Negative goodwill reflects the difference between of the fair
value of Cenkos' net assets at merger and the value of the shares
issued for the purchase. Onerous contracts reflect the write down
of the property no longer occupied by Cenkos. Group restructuring
is the cost of the headcount reduction programme and Transaction
costs cover the advisory fees relating to the merger.
Further non-recurring items will be reported in H2 relating to
completion of the headcount reduction programme and redundant
systems. Overall, the direct costs of the merger are estimated to
be c.GBP3.7m and the overall annualised savings for the Group will
be more than GBP7.0m.
In H1 FY23, the non-recurring items related to the headcount
reduction programme implemented by the Group.
(3) References to unaudited pro forma revenues reflect the
addition of the unaudited consolidated revenue of finnCap Group plc
and the unaudited consolidated revenue of Cenkos Securities plc for
the relevant period as if they were consolidated fully for that
period. Pro forma information is a non-GAAP measure and is provided
to assist with a better understanding of the Group's
performance.
CONSOLIDATED INCOME STATEMENT
Unaudited for the 6 months ended 30 september 2023
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Notes
Revenue 2 13,365 16,352 32,864
Other operating expenses 3 (90) (138) (214)
------------------------------------ ------- ------ ------------- ------------- ----------
Total income 13,275 16,214 32,650
Administrative expenses 4 (17,518) (17,057) (34,543)
------------------------------------ ------- ------ ------------- ------------- ----------
Operating loss before non-recurring
items (4,243) (843) (1,893)
Non-recurring items 5 2,225 (1,444) (3,658)
------------- ------------- ----------
Operating loss (2,018) (2,287) (5,551)
Finance income 73 22 65
Finance charge (223) (242) (502)
Share of associate and
joint venture losses (241) (85) (297)
----------------------------------------- ------ ------------- ------------- ----------
Loss before taxation (2,409) (2,592) (6,285)
Taxation 1,168 (487) 767
Loss attributable to
equity shareholders (1,241) (3,079) (5,518)
--------------------------------------------- ------ ------------- ------------- ----------
Total comprehensive expense
for the year (1,241) (3,079) (5,518)
----------------------------------------------------- ------------- ------------- ----------
Loss per share (pence)
Basic 6 (0.66) (1.82) (3.25)
Diluted 6 (0.66) (1.82) (3.25)
CONSOLIDATED BALANCE SHEET
Unaudited for the 6 months ended 30 september 2023
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current
assets
Property, plant and
equipment 11,960 12,518 12,239
Intangible
assets 13,534 13,514 13,492
Investment in associates
and joint ventures 1,987 2,218 2,106
Financial assets
held at fair value 746 729 404
Deferred tax
asset 8 i) 4,040 133 886
Total non-current
assets 32,267 29,112 29,127
------------------------------- ------- ------------- ------------- ---------
Current assets
Trade and other receivables 8 ii) 17,382 11,186 13,186
Current assets held
at fair value 5,624 213 269
Cash and cash equivalents 12,341 11,124 9,382
Total current
assets 35,347 22,523 22,837
------------------------------ ------- ------------- ------------- ---------
Total assets 67,614 51,635 51,964
------------------------------ ------- ------------- ------------- ---------
Non-Current
liabilities
Lease liability 10,214 10,829 10,008
Borrowings 291 667 481
Provisions 66 30 29
-------------------------------
Total non-Current
liabilities 10,571 11,526 10,518
------------------------------- ------- ------------- ------------- ---------
Current liabilities
Trade and other payables 17,247 9,122 14,632
Borrowings 414 364 843
Total current
liabilities 17,661 9,486 15,475
------------------------------ ------- ------------- ------------- ---------
Equity
Share capital 3,622 1,811 1,811
Share premium 1,716 1,716 1,716
Own shares
held 8 iii) (5,090) (1,926) (1,926)
EBT reserve (350) (338) (294)
Merger relief reserve 8 iv) 25,151 10,482 10,482
Share based payments
reserve 3,107 1,588 1,771
Retained earnings 11,226 17,290 12,411
Total equity 39,382 30,623 25,971
------------------------------ ------- ------------- ------------- ---------
Total equity and
liabilities 67,614 51,635 51,964
------------------------------- ------- ------------- ------------- ---------
CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
Unaudited for the 6 months ended 30 september 2023
Share
Own Merger Based
Share Share Shares EBT Relief Payment Retained Total
Capital Premium Held Reserve Reserve Reserve Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31
March 2022 1,799 1,475 (1,926) (322) 10,482 1,294 20,261 33,063
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
Total comprehensive
expense for the
period - - - (16) - - (3,063) (3,079)
Transactions
with owners:
Share based payments
charge - - - - - 386 - 386
Share options
exercised 12 241 - - - (92) 92 253
12 241 - - - 294 92 639
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
Balance at 30
September 2022 1,811 1,716 (1,926) (338) 10,482 1,588 17,290 30,623
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
Total comprehensive
expense for the
period - - - 44 - - (2,483) (2,439)
Transactions
with owners:
Share based payments
charge - - - - - 191 - 191
Deferred tax
on share-based
payments - - - - - - (450) (450)
Dividends - - - - - - (1,954) (1,954)
Share options
exercised - - - - - (8) 8 -
- - - - - 183 (2,396) (2,213)
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
Balance at 31
March 2023 1,811 1,716 (1,926) (294) 10,482 1,771 12,411 25,971
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
Total comprehensive
expense for the
period - - - (56) - - (1,185) (1,241)
Transactions
with owners:
Share based payments
charge - - - - - 746 - 746
Investment in
subsidiaries 1,811 - (3,164) - 14,669 590 - 13,906
1,811 - (3,164) - 14,669 1,336 - 14,652
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
Balance at 30
September 2023 3,622 1,716 (5,090) (350) 25,151 3,107 11,226 39,382
---------------------- --------- -------- -------- -------- -------- -------- --------- --------
CONSOLIDARED STATEMENT OF CASH FLOWS
Unaudited for the 6 months ended 30 september 2023
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation (2,409) (2,592) (6,285)
Adjustments for:
Depreciation 919 891 1,789
Amortisation of intangible assets 28 31 60
Share of associate and joint
venture losses 241 85 297
Negative goodwill (5,771) - -
Onerous contracts 1,523 - -
Finance income (73) (22) (65)
Finance charge 223 242 502
Share based payments charge 746 386 577
Net fair value gains recognised
in profit or loss 90 138 382
Payments received of non-cash
assets - (15) (854)
(4,483) (856) (3,597)
Changes in working capital:
(Increase) / decrease in trade
and other receivables (4,196) 1,888 398
Increase / (decrease) in trade
and other payables 1,685 (10,505) (5,951)
Increase / (decrease) in provisions 37 (64) (65)
Acquisition of subsidiary working 1,810 - -
capital
Cash utilised from operations (5,147) (9,537) (9,215)
Net cash payments for current
asset investments
held at fair value through profit
or loss (1,719) 658 602
Tax paid - (1,141) (1,155)
Net cash outflow from operating
activities (6,866) (10,020) (9,768)
-------------------------------------- --------------- --------------- ----------
Cash flows from investing activities
Purchase of property, plant
and equipment (109) (112) (724)
Purchase of intangible assets (70) (25) (40)
Proceeds on sale of investments - - 870
Acquisition of subsidiary, net 11,576 - -
of cash acquired
Investments in associates and
joint ventures (50) (2,022) (2,029)
Interest received 73 22 65
Net cash outflow from investing
activities 11,420 (2,137) (1,858)
-------------------------------------- --------------- --------------- ----------
Cash flows from financing activities
Equity dividends paid - - (1,954)
Proceeds from exercise of options - 3 3
Interest paid (14) (21) (38)
Lease liabilities payments (962) (960) (1,555)
Repayment of borrowings (619) (176) (356)
Proceeds from borrowings - - 473
Net cash inflow / (outflow)
from financing activities (1,595) (1,154) (3,427)
-------------------------------------- --------------- --------------- ----------
Net increase / (decrease) in
cash and cash equivalents 2,959 (13,311) (15,053)
Cash and cash equivalents at
beginning of period 9,382 24,435 24,435
Cash and cash equivalents at
end of period 12,341 11,124 9,382
-------------------------------------- --------------- --------------- ----------
NOTES TO THE FINANCIAL STATEMENTS
Unaudited for the 6 months ended 30 september 2023
1. Basis of preparation
Cavendish Financial plc (the "Company") is a public limited
company, limited by shares, incorporated and domiciled in England
and Wales. The Company was incorporated on 28 August 2018. The
registered office of the Company is at 1 Bartholomew Close, London
EC1A 7BL, United Kingdom. The registered company number is
11540126. The Company is quoted on the AIM of the London Stock
Exchange.
The financial Information contained within these condensed
consolidated Interim financial statements Is unaudited and has been
prepared in accordance with International Accounting Standard 34
Interim Financial Reporting ('IAS 34') and AIM Rule 18. The
financial information contained in the Interim Financial Statements
is unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006.
The statutory accounts for the 12 months ended 31 March 2023
have been delivered to the Registrar of Companies. The statutory
accounts have been prepared in accordance with International
Financial Reporting Standards and International Accounting
Standards as adopted by the European Union and the IFRS
Interpretation Committee interpretations (collectively IFRSs), and
in accordance with applicable law. The Independent Auditor's Report
to the members of finnCap Group plc contained no qualification or
statement under section 498 (2) or (3) of the Companies Act
2006.
These consolidated Interim 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.
The preparation of these Interim Financial Statements requires
the use of certain critical accounting estimates. It also requires
Group management to exercise judgement in applying the Group's
accounting policies. Judgements and estimates used in these Interim
Financial Statements have been applied on a consistent basis with
those use in the statutory accounts for the 12 months ended 31
March 2023.
As normal, the Group 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 Group has adequate resources to
continue trading for at least 12 months from the date of approval
of this report. Accordingly, they continue to adopt the going
concern basis in preparing the Interim Financial Statements.
2. Segmental reporting
The Group is managed as an integrated financial services group
and the different revenue streams are considered to be subject to
similar economic characteristics. Consequently, the Group is
managed as one business unit.
The trading operations of the Group comprise of Corporate
Advisory and Broking, M&A Advisory and Institutional
Stockbroking. The Group's revenues are derived from activities
conducted in the UK, although several of its corporate and
institutional investors and clients are situated overseas. All
assets of the Group reside in the UK.
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenues
Retainers 3,914 3,452 6,956
Transactions 8,019 10,983 22,632
Securities 1,432 1,917 3,276
Total Revenue 13,365 16,352 32,864
---------------------------- --------------- --------------- ----------
Services transferred
at a point in time 8,665 12,100 24,413
Services transferred over
a period of time 4,700 4,252 8,451
Total Revenue 13,365 16,352 32,864
---------------------------- --------------- --------------- ----------
3. Other operating EXpenses
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Other operating expenses (90) (138) (214)
---------------------------- --------------- --------------- ----------
4. Expenses by Nature
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Employee benefit
expense 11,855 11,329 23,257
Non-employee
costs 5,663 5,728 11,286
Total administrative
expenses 17,518 17,057 34,543
------------------------ --------------- --------------- ----------
Average number of
employees 157 151 155
------------------------ --------------- --------------- ----------
Employee benefit expense includes share based payments of
GBP746k (H1 FY23: GBP386k).
5. Non-recurring items
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Negative goodwill (5,771) - -
Onerous contracts 1,811 - -
Group restructuring 620 1,255 3,247
Transaction fees 1,115 189 411
Non-recurring
items (2,225) 1,444 3,658
--------------------------- ----------- --------------- --------------- ------------
Non-recurring items in the period relate to negative goodwill,
group restructuring costs, onerous contracts and legal and
professional fees in connection with the acquisition of Cenkos
Securities plc on the 7(th) September 2023, see note 9.
6. Earnings per share
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
Earnings per share
Number of shares
Weighted average number of shares for
the purposes
of basic earnings
per share 187,101,924 169,041,783 169,724,785
---------------------------------- ------- ----------------- --------------- ------------
Weighted average dilutive effect of
conditional share
awards 2,453,333 3,011,648 11,847,873
----------------- --------------- ------------
Weighted average number of shares for
the purposes
of diluted earnings
per share 189,555,257 172,053,431 181,572,658
---------------------------------- ------- ----------------- --------------- ------------
Loss per ordinary
share (pence)
Basic loss per ordinary
share (0.66) (1.82) (3.25)
Diluted loss per
ordinary share (0.66) (1.82) (3.25)
---------------------------------- ------- ---------- --------- --------------- ------------
The shares held by the Group's Employee Benefit Trusts have been
excluded from the calculation of earnings per share.
7. Dividends
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Dividends proposed and paid
during the year - - 1,954
--------------------------------- ---------------- ---------------- ----------
Dividends per share -p -p 1.15p
--------------------------------- ---------------- ---------------- ----------
8. Balance Sheet Items
i) Deferred tax asset
Deferred taxation for the group relates to timing difference on
the taxation relief on the exercise of options and tax losses
carried forward. The amount of the asset is determined using tax
rates that have been enacted or substantively enacted when the
deferred tax assets are expected to be recovered.
ii) Trade and other receivables
Trade and other receivable principally consist of amounts due
from client, brokers and other counterparties. In addition, the
Group has credit risk exposure to the gross value of unsettled
trades (on a delivery versus payment basis) at its agency
settlement agent (Pershing, a wholly owned subsidiary of Bank of
New York Mellon Corporation).
iii) Own Shares Held
The value of own shares held is the cost of shares purchased the
Group's Employee Benefit Trusts. The Trusts were established with
the authority to acquire shares in the Group and are funded by the
Group.
iv) Merger relief reserve
The merger relief reserve represents:
-- the difference between net book value of subsidiaries
acquired via share-for-share exchanges and the nominal value of the
shares issued as consideration. Upon consolidation, part of the
merger reserve is eliminated to recognise the pre-acquisition
reserves of Cavendish Capital Markets Limited (December 2018) and
Cavendish Securities plc (September 2023); and
-- the difference between the fair value and nominal value of
shares issued for the acquisition of Cavendish Corporate Finance
(UK) Limited and Cavendish Corporate Finance LLP from the
acquisition in December 2018.
This reserve is not distributable.
v) Post balance sheet events
There are no material post balance sheet events.
9. Acquisition of Cavendish Securites PLC
On 7 September 2023, having received FCA approval, Cavendish
Financial plc issued 181,094,721 shares to acquired 100% of the
share capital of Cavendish Securities plc by means of a scheme of
arrangement under Part 26 of the UK Companies Act 2006 for
consideration of GBP13.9m.
The fair value of the shares issue was calculated using the
Cavendish Financial plc market price of 9.1 pence per share, on the
AIM exchange at its close of business on 6 September 2023. The fair
value was increased due to employee share based awards outstanding
at the acquisition date and reduced due to shares held by the
Cavendish Securities plc at the date of the acquisition.
Book Value Fair Value Fair Value
6 September 6 September
2023 Adjustments 2023
Right of use assets 3,207 744 3,951
Deferred tax assets 2,049 (268) 1,781
Financial assets held
at fair value 467 - 467
Other non-current assets 408 - 408
Trade and other receivables 8,182 - 8,182
Current assets held
at fair value 3,636 - 3,636
Cash and cash equivalents 11,576 - 11,576
Trade and other payables (10,650) 328 (10,322)
Net assets acquired 18,875 804 19,679
Fair value of equity consideration 13,907
Negative goodwill (5,772)
----------------------------- ------------ ------------ ------------
IFRS3 requires the acquirer to perform a fair value exercise
during the measurement period which can last no more than twelve
months from the date of acquisition. An assessment of intangible
assets was performed at the acquisition as part of the
implementation of IFRS 3. No additional assets were recognised as a
result of this review. The acquired right of use assets and lease
liabilities were recognised using the present value of the
remaining lease payments at the acquisition date.
Transactions costs of GBP1.1m were incurred in relation to the
acquisition.
10. Related party transactions
During the period, 5,000,000 options with a 15p exercise price
and 2,000,000 options with a 1p exercise price were issued to John
Farrugia, a director of Cavendish Finance plc. All of the options
have a vesting period to two years.
11. Alternative performance measures
The below non-GAAP alternative performance measures have been
used.
Adjusted profit before tax
Measure: Adjusted profit before tax is calculated excluding
share based payments, non-recurring items, share of associate
profits and fair value gains on long term investments.
Use: Provides a consistent measure of the earnings performance
of the core business activities.
12 months
6 months ended 6 months ended ended
30 September 30 September 31 March
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Operating loss (2,018) (2,287) (5,551)
Fair value gains on long
term investments 90 138 -
Negative goodwill (see note
9) (5,771) - -
Other non-recurring expenses 3,546 1,444 3,658
Share based payments 746 386 577
Net finance charge (150) (220) (232)
Amortisation - - 59
Adjusted loss before
tax (3,557) (539) (1,489)
-------------------------------- --------------- --------------- ----------
Pro forma Revenues
References to unaudited pro forma revenues reflect the addition
of the unaudited consolidated revenue of finnCap Group plc and the
unaudited consolidated revenue of Cenkos Securities plc for the
relevant period as if they were consolidated fully for that period.
Pro forma information is a non-GAAP measure and is provided to
assist with a better understanding of the Group's performance.
INDEPENT REVIEW REPORT TO CAVISH FINANCIAL PLC
Unaudited for the 6 months ended 30 september 2023
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the London Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises the condensed
Income Statement, the condensed Statement of Comprehensive Income,
the condensed Statement of Financial Position, the condensed Cash
Flow Statement and the condensed Statement of Changes in Equity and
all accompanying notes.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting."
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with
the London Stock Exchange AIM Rules for Companies which require
that the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange AIM Rules for Companies for no
other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
Date 18 December 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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END
IR EAEAPFAEDFAA
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