TIDMCNKS
RNS Number : 1870L
Cenkos Securities PLC
09 September 2021
9 September 2021
Cenkos Securities plc
Interim Results for the six months ended 30 June 2021
Cenkos Securities plc (the "Company" or "Cenkos" or the "Firm"),
the independent institutional stockbroking firm, today announces
its results for the six months ended 30 June 2021.
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 30 Jun-21 30-Jun-20
------------------------------ ---------- ----------
GBP18.2 GBP13.3
Revenue m m
Underlying profit (1) GBP2.8 m GBP2.0 m
Profit before tax GBP1.7 m GBP0.8 m
Profit after tax GBP1.5m GBP0.6m
GBP22.4
Cash GBP24.0m m
Net assets GBP25.4m GBP24.6m
Basic earnings per share (2) 3.1p 1.2p
Interim dividend per share 1.25p 1.0p
(1) Underlying profit is profit before restructuring costs and
charges related to the Cenkos incentive plans and tax.
(2) Prior year comparatives have been restated to conform with
current interpretation of IAS 33 such that there is no adjustment
for dividends on shares held in SIP & DBS in arriving at
Earnings for the purpose of basic earnings per share.
Since being admitted to trading on AIM in 2006, the Company has
returned GBP116.4 million of cash to shareholders, equivalent to
180.8p per share, before the payment of the proposed 2021 interim
dividend of 1.25p per share.
Outlook:
Since the end of the period, the completion of 2 IPOs and a
further 8 fundraisings further demonstrate the ongoing strength of
the business and its pipeline. Whilst we cannot always assume
favourable conditions within equity markets, by continuing to lay
the groundwork for growth and through our tenacity and long-term
partnering with clients, we see reasons for optimism for the
remainder of 2021 and beyond.
Julian Morse, Chief Executive Officer commented: " The healthy
performance in the first six months of the year, with a 44%
increase in underlying profits of GBP2.8m, a 37% increase in
revenues to GBP18.2m and a 25% increase in our interim dividend, is
testament to the quality of our clients and the focus and
commitment of our colleagues. Our people are our greatest asset and
I want to thank everyone for their hard work on delivering these
results and setting us up with a strong pipeline. In recognition of
the importance of our people, we are proud to have implemented a
company-wide TSR-based share incentive scheme for the first time to
align all our key stakeholders and ensure everyone at the firm is
able to share in our success. "
Enquiries:
Cenkos Securities plc
Julian Morse - Chief Executive +44 20 7397
Officer 8900
Nominated Adviser
Spark Advisory Partners Limited
Matthew Davis +44 20 3368 3550
Public Relations
The Nisse Consultancy
Jason Nisse +44 7769 688618
Andrew Garfield +44 7974 982337
Chairman's statement
With a new leadership team in place, bringing energy and focus
to delivering our strategic goals and further developing the firm's
collaborative and entrepreneurial culture, I am heartened by our
performance in the first six months of the financial year.
Against the backdrop of the ongoing challenges presented by
Covid-19 and remote working, the leadership team have created a
flexible and inclusive work environment for our employees and these
results show how the firm's values of professionalism and teamwork
are a key part of our recent success.
The Board is committed to building Cenkos to the number one
position in our key markets and to achieve this, we must look
beyond the short-term cyclicality of the markets. Our long-term
strategy requires investment in both people and systems, and I am
delighted to report that we continue to attract and develop the
best talent to achieve this.
With an energised team, a strong balance sheet and a clear focus
on our strategic goals, we are well-positioned to build further
from here, creating value for our entire shareholder base.
Lisa Gordon
Non-Executive Chairman
8 September 2021
Chief Executive Officer's statement
The healthy performance in the first six months of the year,
with a 44% increase in underlying profits of GBP2.8m, a 37%
increase in revenues to GBP18.2m and a 25% increase in our interim
dividend, is testament to the quality of our clients and the focus
and commitment of our colleagues. Our people are our greatest asset
and I want to thank everyone for their hard work on delivering
these results and setting us up with a strong pipeline. In
recognition of the importance of our people, we are proud to have
implemented a company-wide TSR-based share incentive scheme for the
first time to align all our key stakeholders and ensure everyone at
the firm is able to share in our success.
Our drive and ambition helped us win twelve new clients across
the business during the first six months of the year and
successfully secure more than 10% of all funds raised on AIM during
that time, as well as execute significant follow-on placings for a
number of our main list investment company clients. 2 IPOs and a
further 8 fundraisings since the end of the first half further
demonstrate the ongoing strength of the business and its potential
to continue to grow both revenue and market share.
We are seeing the benefits of our strategy begin to emerge.
Maintaining a low-cost base and a strong balance sheet have allowed
us to invest in people, systems and technology, provide high-touch
service levels to our clients and create a resilient platform from
which we can grow.
With 12 new hires in the first half, we continue to deepen our
talent pool across the firm and will look to make further
high-quality hires to deliver our mission of building market
share.
The market for UK equities has been strong during the period,
and while we see no reason for this to change in the near term, we
cannot always assume favourable conditions. That said, a large
proportion of our business is focused on raising money for
corporates trading on AIM, which has seen the aggregate value of
companies on the market double over the last seven years, and those
companies consistently raise funds, with the amount raised each
year on AIM ranging from GBP3.8 billion to GBP6.4 billion. By
continuing to lay the groundwork for growth and through our
tenacity and long-term partnering with innovative clients, we see
reasons for optimism for the remainder of 2021 and beyond.
Performance
I am pleased to report that H1 2021 revenue increased by 37% to
GBP18.2 million (H1 2020: GBP13.3 million) while underlying profit
increased by 44% to GBP2.8 million (H1 2020: GBP2.0 million).
A summary of H1 2021 performance compared to H1 2020 is set out
in the table below:
Six months Six months
ended ended
30 June 30 June
2021 2020
Revenue streams GBP 000's GBP 000's % change
---------------------------------------------- ----------- ----------- ---------
Corporate finance 12,732 9,216 38%
---------------------------------------------- ----------- ----------- ---------
Nomad, broking and research 3,076 3,244 -5%
---------------------------------------------- ----------- ----------- ---------
Execution - net trading gains 2,413 806 199%
Revenue 18,221 13,266 37%
---------------------------------------------- ----------- ----------- ---------
Other operating expense (45) (361) -88%
---------------------------------------------- ----------- ----------- ---------
Staff costs (11,778) (7,392) 59%
---------------------------------------------- ----------- ----------- ---------
Administrative expenses before restructuring
and incentive plans (3,565) (3,539) 1%
----------- ----------- ---------
Underlying profit 2,833 1,974 44%
---------------------------------------------- ----------- ----------- ---------
Restructuring costs and incentive plans (1,066) (1,158) -8%
---------------------------------------------- ----------- ----------- ---------
Operating profit 1,767 816 117%
---------------------------------------------- ----------- ----------- ---------
Investment income - interest income 7 23 -71%
---------------------------------------------- ----------- ----------- ---------
Finance costs (88) (86) 2%
---------------------------------------------- ----------- ----------- ---------
Profit before tax 1,686 753 124%
---------------------------------------------- ----------- ----------- ---------
Tax (183) (163) 12%
---------------------------------------------- ----------- ----------- ---------
Profit after tax 1,503 590 155%
---------------------------------------------- ----------- ----------- ---------
Corporate finance
Corporate finance fees increased by 38% to GBP12.7 million (H1
2020: GBP9.2 million) reflecting an increased level of corporate
activity across the market during the period. Cenkos completed 16
(H1 2020: 11) placing transactions helping its clients raise
GBP0.58 billion in equity finance. Of this, GBP0.40 billion was
raised on the AIM market which equates to just over 10% (H1 2020:
9%) of the GBP3.96 billion (H1 2020: GBP2.89 billion) raised by
Companies during the period to 30 June 2021.
Nomad, broking and research
The number of clients represented by Cenkos increased over the
first half of 2021 from 94 to 100 (June 2020: 97), although for
timing reasons this is not fully reflected in the Nomad, broking
and research fees generated, which decreased by 5% to GBP3.1
million (H1 2020: GBP3.2 million).
Execution
Net trading gains increased by 199% to GBP2.4 million (H1 2020:
GBP0.8 million) against a backdrop of heightened market activity
which had followed on from the final quarter of 2020 and continued
throughout the first half of 2021. During this period, we
maintained a top 5 market share in 90% (H1 2020: 94%) of our
clients' stocks and overall made markets in 219 (H1 2020: 185)
equities and Investment Trusts.
Other operating income
Other operating income includes the fair value gains and losses
on options and warrants, which this year has been shown separately
from execution - net trading gains under the revenue caption as the
Directors believe this provides a clearer view of the performance
of the business by separating out from revenue the gains and losses
on level 3 instruments. To 30 June 2021, this showed a loss of
GBP45k against the prior period loss of GBP361k, reflecting the
fair value movement of the warrants received in lieu of fees and
those acquired during the period.
Administrative expenses
Administrative expenses - staff costs
Staff costs increased by 59% to GBP11.8 million (H1 2020: GBP7.4
million) primarily due to an increase in the accrual for variable
remuneration in line with the significant improvement in
performance, but also as a result of a targeted increase in staff
to 92 employees at 30 June 2021 (June 2020: 89) from 90 at 31
December 2020. This is in-line with Cenkos' aim to recruit ahead of
the curve, so it may continue to provide a premium service to its
clients as the business grows.
Administrative expenses - other
Other administrative expenses remained largely flat at GBP3.6
million (H1 2020: GBP3.5 million) reflecting continued tight
control over the cost base offset by considered investment.
Administrative expenses - restructuring costs and Incentive
Plans (STIP, LTIP & CSOP)
Costs associated with the restructuring and incentive plans
decreased by 8% to GBP1.1 million (H1 2020: GBP1.2 million). In
addition to the charges associated with the STIP ("Short Term
Incentive Plan"), the incentive plan launched in April 2020, this
caption also includes charges associated with the LTIP ("Long Term
Incentive Plan") and CSOP ("Company Share Option Plan"). These
schemes were launched in May 2021, aimed at retaining and
incentivizing staff, with the LTIP focused on senior management and
the CSOP all employees. The charge of GBP0.6 million (H1 2020:
GBP0.5 million) in respect of these plans represents the portion of
the fair value of the schemes allocated to this period.
Profit and earnings per share
Underlying profit increased by 44% to GBP2.8 million (H1 2020:
GBP2.0 million). Underlying profit is disclosed before
restructuring costs and costs associated with the incentive plans
as the Directors believe this provides a clearer view of the
performance of the business.
Statutory profit before tax for the period increased by 124% to
GBP1.7 million (H1 2020: GBP0.8 million). The tax charge for the
period of GBP0.2 million (H1 2020: GBP0.2 million) equates to an
effective tax rate of 11% (H1 2020: 22%). Profit after tax for the
period was GBP1.5 million (H1 2020: GBP0.6 million).
Basic earnings per share for the period was 3.1p (H1 2020
Restated: 1.2p).
Financial position
The statement of financial position shows net assets increased
to GBP25.4 million as at 30 June 2021 (30 June 2021: GBP24.6
million), which reflects the profits generated over the period
being partially offset by the cost of shares acquired by the EBT
and dividends paid.
The decrease in non-current assets relates to the amortization
of the right of use asset recognized in respect of the London and
Edinburgh office leases, which has a corresponding impact on trade
and other payables.
The increase in net trading investments is mainly due to the
increase in asset prices and activity over the period. The increase
in activity and the settlement of share trades is also reflected in
the movements in trade and other receivables and trade and other
payables. Profitable trading during the period has resulted in an
increase in the accrual for variable remuneration and cash and cash
equivalents.
30 June 30 June
2021 2020 Change
Net assets summary GBP 000's GBP 000's GBP 000's
------------------------------------- ---------- ---------- ----------
Non-current assets 4,771 5,171 (400)
------------------------------------- ---------- ---------- ----------
FVOCI financial assets - - -
------------------------------------- ---------- ---------- ----------
Other current financial assets 7,126 4,163 2,963
------------------------------------- ---------- ---------- ----------
Other current financial liabilities (2,678) (681) (1,997)
------------------------------------- ---------- ---------- ----------
Net trading investments 4,448 3,482 965
------------------------------------- ---------- ---------- ----------
Trade and other receivables 15,821 11,737 4,085
------------------------------------- ---------- ---------- ----------
Trade and other payables (23,620) (18,155) (5,465)
------------------------------------- ---------- ---------- ----------
Cash and cash equivalents 23,982 22,352 1,630
25,402 24,587 816
------------------------------------- ---------- ---------- ----------
Capital and Liquidity
The Board continuously assesses the Company's cash and capital
requirements with the intention of maintaining a strong balance
sheet, including a significant surplus over and above its Pillar 1,
Individual Capital Guidance ('ICG') and Combined Capital Buffer
('CCB') requirements and sufficient liquid resources to cover at
least 12 months of fixed overheads.
The new Investment Firms Prudential Regime ('IFPR') is due to
come into force in January 2022. Whilst the legislation is subject
to final approval, Management has conducted a high-level review and
expect there to be little change to Cenkos' capital requirement
under the new IFPR.
At 30 June 2021, Cenkos had a capital resources surplus of
GBP17.0 million (H1 2020: GBP15.8 million) above its Pillar 1
regulatory capital requirement.
The Board
As previously announced, Jim Durkin retired from the Company on
the 12 May 2021. Subsequent to the Annual General Meeting, Julian
Morse took up the position of Chief Executive Officer and Jeremy
Osler took up his role as an Executive Director of the Company,
both positions having received regulatory approval from the
Financial Conduct Authority.
Going concern
The Coronavirus ('COVID-19') continues to have a major impact
worldwide. Many countries still have measures in place restricting
travel, business operations and peoples' activities to contain the
spread of the virus. In the UK, restrictions have been removed
largely due to the success of the vaccination programme resulting
in a fall in the number of new cases and hospitalizations. This is
being closely monitored, as is the emergence of new variants and
their resistance to the vaccines. Cenkos' offices are open and
fully operational, although should restrictions be re-imposed, the
business continuity plan will once again be enacted. Management has
performed an impact analysis as part of its going concern
assessment using information available to the date of issue of
these financial statements. Having performed this analysis,
management believes: (a) regulatory capital requirements will
continue to be met; (b) the Company has sufficient liquidity to
meet its liabilities for the next 12 months; and (c) 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.
Outlook
Since the end of the period, the completion of 2 IPOs and a
further 8 fundraisings further demonstrate the ongoing strength of
the business and its pipeline. Whilst we cannot always assume
favourable conditions within equity markets, by continuing to lay
the groundwork for growth and through our tenacity and long-term
partnering with clients, we see reasons for optimism for the
remainder of 2021 and beyond.
Dividend
The Board recognises the importance of dividends to our
shareholders, and since being admitted to AIM we have returned the
equivalent of 180.8p per share of cash to shareholders. The Board
will continue to look to return significant value to shareholders
while seeking to establish a level of consistency of dividend
payments throughout variable market conditions.
The Board proposes an interim dividend of 1.25p (H1:2020 1.0p)
per share. The dividend will be paid on 4 November 2021 to all
shareholders on the register at 8 October 2021.
Julian Morse
Chief Executive Officer
8 September 2021
Condensed income statement
For the six months ended 30 June 2021
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP 000's GBP 000's GBP 000's
---------------------------------------------- ----------- ----------- ------------
Continuing operations
---------------------------------------------- ----------- ----------- ------------
Revenue 18,221 13,266 31,654
------------------------------------------------- ----------- ----------- ------------
Other operating income/(expense) (45) (361) 259
Administrative expenses (16,409) (12,089) (29,514)
------------------------------------------------- ----------- ----------- ------------
Operating profit 1,767 816 2,399
------------------------------------------------- ----------- ----------- ------------
Investment income - interest
income 7 23 30
------------------------------------------------- ----------- ----------- ------------
Finance costs - interest
on lease liability (88) (86) (176)
------------------------------------------------- ----------- ----------- ------------
Profit before tax from continuing operations 1,686 753 2,253
------------------------------------------------ ----------- ----------- ------------
Tax (183) (163) (449)
------------------------------------------------- ----------- ----------- ------------
Profit after tax 1,503 590 1,804
------------------------------------------------- ----------- ----------- ------------
Attributable to:
---------------------------------------------- ----------- ----------- ------------
Equity holders of Cenkos Securities plc 1,503 590 1,804
------------------------------------------------ ----------- ----------- ------------
Restated*
-----------
Basic earnings per share 3.1p 1.2p 3.7p
------------------------------------------------- ----------- ----------- ------------
Diluted earnings per share 2.7p 1.1p 3.3p
------------------------------------------------- ----------- ----------- ------------
* Prior year comparatives have been restated to conform with IAS
33 such that there is no longer any adjustment for dividends on
shares held in SIP & DBS in arriving at Earnings for the
purpose of basic earnings per share.
Condensed statement of comprehensive income
For the six months ended 30 June 2021
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP 000's GBP 000's GBP 000's
------------------------------------------------------- ----------- ----------- ------------
Profit 1,503 590 1,804
---------------------------------------------------------- ----------- ----------- ------------
Amounts that will not be recycled to income statement
in future periods
---------------------------------------------------------- ----------- ----------- ------------
Loss on FVOCI financial
asset - (36) (35)
---------------------------------------------------------- ----------- ----------- ------------
Tax on FVOCI financial
asset - 6 6
---------------------------------------------------------- ----------- ----------- ------------
Other comprehensive losses - (30) (29)
---------------------------------------------------------- ----------- ----------- ------------
Total comprehensive income 1,503 560 1,775
---------------------------------------------------------- ----------- ----------- ------------
Attributable to:
------------------------------------------------------- ----------- ----------- ------------
Equity holders of Cenkos
Securities plc 1,503 560 1,775
---------------------------------------------------------- ----------- ----------- ------------
Condensed statement of financial position
As at 30 June 2021
Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
GBP 000's GBP 000's GBP 000's
------------------------------- ---------- ---------- ------------
Non-current assets
------------------------------- ---------- ---------- ------------
Property, plant and equipment 320 434 382
---------------------------------- ---------- ---------- ------------
Right-of-use assets 3,817 4,299 4,059
Intangible asset 16 50 33
Deferred tax asset 617 387 727
Investments in subsidiary
undertakings 1 1 1
---------------------------------- ---------- ---------- ------------
4,771 5,171 5,202
------------------------------- ---------- ---------- ------------
Current assets
------------------------------- ---------- ---------- ------------
Trade and other receivables 15,821 11,737 12,993
---------------------------------- ---------- ---------- ------------
FVOCI financial assets - - -
------------------------------- ---------- ---------- ------------
Other current financial
assets 7,126 4,163 5,312
---------------------------------- ---------- ---------- ------------
Cash and cash equivalents 23,982 22,352 32,735
---------------------------------- ---------- ---------- ------------
46,929 38,252 51,040
------------------------------- ---------- ---------- ------------
Total assets 51,700 43,423 56,242
---------------------------------- ---------- ---------- ------------
Current liabilities
------------------------------- ---------- ---------- ------------
Trade and other payables (18,913) (12,818) (24,520)
---------------------------------- ---------- ---------- ------------
Other current financial
liabilities (2,678) (681) (1,011)
---------------------------------- ---------- ---------- ------------
(21,591) (13,499) (25,531)
------------------------------- ---------- ---------- ------------
Net current assets 25,338 24,753 25,509
---------------------------------- ---------- ---------- ------------
Non-current liabilities
------------------------------- ---------- ---------- ------------
Trade and other payables (4,707) (5,337) (5,086)
---------------------------------- ---------- ---------- ------------
Total liabilities (26,298) (18,836) (30,617)
---------------------------------- ---------- ---------- ------------
Net assets 25,402 24,587 25,625
---------------------------------- ---------- ---------- ------------
Equity
------------------------------- ---------- ---------- ------------
Share capital 567 567 567
---------------------------------- ---------- ---------- ------------
Share premium 3,331 3,331 3,331
---------------------------------- ---------- ---------- ------------
Capital redemption reserve 195 195 195
---------------------------------- ---------- ---------- ------------
Own shares (6,796) (5,579) (6,607)
---------------------------------- ---------- ---------- ------------
FVOCI reserve (170) (171) (170)
---------------------------------- ---------- ---------- ------------
Retained earnings 28,275 26,244 28,309
---------------------------------- ---------- ---------- ------------
Total equity 25,402 24,587 25,625
---------------------------------- ---------- ---------- ------------
Condensed cash flow statement
For the six months ended 30 June 2021
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP 000's GBP 000's GBP 000's
-------------------------------------------------------- ----------- ----------- ------------
Profit 1,503 590 1,804
----------------------------------------------------------- ----------- ----------- ------------
Adjustments for:
-------------------------------------------------------- ----------- ----------- ------------
Investment income - interest
income (7) (22) (30)
----------------------------------------------------------- ----------- ----------- ------------
Finance costs - interest
on lease liability 88 86 176
----------------------------------------------------------- ----------- ----------- ------------
Tax expense 183 163 449
----------------------------------------------------------- ----------- ----------- ------------
Depreciation of property, plant and equipment,
ROU assets and intangible asset 329 348 691
----------------------------------------------------------- ----------- ----------- ------------
Shares and options received
in lieu of fees (163) (120) (11)
----------------------------------------------------------- ----------- ----------- ------------
Share-based payment expense 1,035 945 2,395
----------------------------------------------------------- ----------- ----------- ------------
Operating cash inflow before movements in working
capital 2,968 1,990 5,474
----------------------------------------------------------- ----------- ----------- ------------
(Increase) / decrease in net trading investments
and FVOCI financial assets 16 3,795 2,867
----------------------------------------------------------- ----------- ----------- ------------
(Increase) / decrease in trade
and other receivables (2,823) 1,756 468
--------------------------------------------------------- ----------- ----------- ------------
(Decrease) / increase in trade
and other payables (5,295) (2,596) 8,301
--------------------------------------------------------- ----------- ----------- ------------
Net cash (outflow) / inflow from operating activities
before interest and tax paid (5,134) 4,945 17,110
----------------------------------------------------------- ----------- ----------- ------------
Tax paid (485) - (99)
----------------------------------------------------------- ----------- ----------- ------------
Net cash (outflow) / inflow from operating activities (5,619) 4,945 17,011
----------------------------------------------------------- ----------- ----------- ------------
Investing activities
-------------------------------------------------------- ----------- ----------- ------------
Interest received - 26 24
----------------------------------------------------------- ----------- ----------- ------------
Purchase of property, plant and
equipment (9) (7) (41)
--------------------------------------------------------- ----------- ----------- ------------
Net cash outflow from investing activities (9) 19 (17)
----------------------------------------------------------- ----------- ----------- ------------
Financing activities
-------------------------------------------------------- ----------- ----------- ------------
Landlord incentive received as part of
lease arrangement - 500 500
---------------------------------------------------------- ----------- ----------- ------------
Rent paid under lease
arrangement (378) (22) (117)
----------------------------------------------------------- ----------- ----------- ------------
Dividends paid (1,280) (515) (1,027)
----------------------------------------------------------- ----------- ----------- ------------
Proceeds from sale of own shares to employees
on dividend reinvestment 14 - 12
----------------------------------------------------------- ----------- ----------- ------------
Acquisition of own shares (1,481) (908) (1,960)
----------------------------------------------------------- ----------- ----------- ------------
Net cash used in financing activities (3,125) (945) (2,592)
----------------------------------------------------------- ----------- ----------- ------------
Net (decrease) / increase in cash and cash equivalents (8,753) 4,019 14,402
----------------------------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at beginning
of period 32,735 18,333 18,333
--------------------------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at
end of period 23,982 22,352 32,735
--------------------------------------------------------- ----------- ----------- ------------
Condensed statement of changes in equity
For the six months ended 30 June 2021
Equity attributable to equity holders
Capital
Share Share redemption Own FVOCI Retained
capital premium reserve shares reserve earnings Total
GBP GBP
000's GBP 000's GBP 000's 000's GBP 000's GBP 000's GBP 000's
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Balance at 1 January 2020 567 3,331 195 (5,436) (141) 26,142 24,658
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Profit - - - - - 590 590
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Loss on FVOCI financial
asset net of tax - - - - (30) - (30)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Total comprehensive income - - - - (30) 590 560
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Transfer of shares from
share plans to employees - - - 765 - (765) -
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Acquisition of own shares - - - (908) - - (908)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Credit to equity for
equity-settled
share-based payments - - - - - 792 792
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Dividends paid - - - - - (515) (515)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Balance at 30 June 2020 567 3,331 195 (5,579) (171) 26,244 24,587
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Profit - - - - - 1,214 1,214
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Loss on FVOCI financial
assets net of tax - - - - 1 - 1
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Total comprehensive income - - - - 1 1,214 1,215
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Issue of shares to employees
on dividend reinvestment - - - 13 - - 13
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Transfer of shares from
share plans to employees - - - 11 - (11) -
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Acquisition of own shares - - - (1,052) - - (1,052)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Credit to equity for
equity-settled
share-based payments - - - - - 1,374 1,374
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Dividends paid - - - - - (512) (512)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Balance at 31 December 2020 567 3,331 195 (6,607) (170) 28,309 25,625
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Capital
Share Share redemption Own FVOCI Retained
capital premium reserve shares reserve earnings Total
GBP GBP
000's GBP 000's GBP 000's 000's GBP 000's GBP 000's GBP 000's
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Balance at 1 January 2021 567 3,331 195 (6,607) (170) 28,309 25,625
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Profit - - - - - 1,503 1,503
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Total comprehensive income - - - - - 1,503 1,503
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Issue of shares to employees
on dividend reinvestment - - - 8 - 6 14
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Transfer of shares from
share plans to employees - - - 1,284 - (1,284) -
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Acquisition of own shares - - - (1,481) - - (1,481)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Credit to equity for
equity-settled
share-based payments - - - - - 985 985
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Deferred tax on share-based
payments - - - - - 36 36
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Dividends paid - - - - - (1,280) (1,280)
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Balance at 30 June 2021 567 3,331 195 (6,796) (170) 28,275 25,402
----------------------------------- --------- ---------- ------------ -------- ---------- ---------- ----------
Notes to the financial statements
1. Accounting policies
General information
The interim condensed financial statements of Cenkos Securities
plc (the "Company" or "Cenkos") for the six months ended 30 June
2021 are unaudited and were approved by the Board of Directors for
issue on 8 September 2021.
The Company is incorporated in England under the Companies Act
2006 (company registration No. 05210733) and its shares are
publicly traded. The Company's principal activity is as an
institutional stockbroker to UK small and mid- cap companies and
investment funds. These financial statements are presented in
pounds sterling because that is the currency of the primary
economic environment in which the Company operates.
The preparation of financial statements in conformity with
UK-adopted International Accounting Standards requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results
ultimately may differ from those of estimates.
Critical accounting policies and key sources of estimation
uncertainty
The judgements and assumptions considered to be the most
important to the portrayal of the Company's financial condition are
those relating to equity-settled share-based payments, valuation of
derivative financial assets, provisions and revenue recognition.
These critical accounting policies and judgements are described on
page 68 of the Cenkos Securities plc's 2020 Annual Report and
Accounts. In addition to this, to the extent that derivative
financial assets are traded, reference is made to recent bargains
in estimating the fair value of these financial assets. The
Directors consider that this reflects fair consideration for the
services provided.
These financial statements have been prepared on the historical
cost basis, except for the revaluation of certain financial
instruments.
Where appropriate prior year figures have been restated to
conform to the current year presentation.
Basis of accounting
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. Cenkos
Securities PLC transitioned to UK-adopted International Accounting
Standards in its Financial Statements on 1 January 2021. This
change constitutes a change in accounting framework. However, there
is no impact on recognition, measurement or disclosure in the
period reported as a result of the change in framework.
The interim condensed financial statements for the six months
ended 30 June 2021 have been prepared in accordance with
International Accounting Standard ("IAS") 34 Interim Financial
Reporting. The interim condensed financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual financial statements for the year ended 31 December
2020.
The accounting policies adopted in the preparation of the
interim condensed financial statements are consistent with those
followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2020 apart from in
relation to derivative financial assets, where to the extent that
they are traded, reference is made to recent bargains in estimating
the fair value of these financial assets.
The financial information contained in these interim condensed
financial statements does not constitute the Company's statutory
accounts within the meaning of section 434 of the Companies Act
2006. The comparative information contained in this report for the
year ended 31 December 2020 does not constitute the statutory
accounts for that financial period. Those accounts have been
reported on by the Company's auditors, BDO LLP and delivered to the
Registrar of Companies. The report of the auditors was unqualified
and did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development and performance, its
principal risks and uncertainties, the financial position of the
Group, its cash flows and liquidity position are set out in the
Strategic Report in the Group's Annual Report for the year ended 31
December 2020.
In light of internal forecasts and the current pipeline of
transactions, the Directors are satisfied that the Group has
sufficient resources to continue in operation for the foreseeable
future, a period of not less than 12 months from the date of this
report. Accordingly, the Directors continue to adopt a going
concern basis in preparing the interim financial statements.
The Coronavirus ('COVID-19') continues to have a major impact
worldwide. Many countries still have measures in place restricting
travel, business operations and peoples' activities to contain the
spread of the virus. In the UK, restrictions have been removed
largely due to the success of the vaccination program resulting in
a fall in the number of new cases and hospitalisations. This is
being closely monitored as is the emergence of new variants and
their resistance to the vaccines. Cenkos offices are open and fully
operational, although should restrictions be re-imposed, the
business continuity plan will once again be enacted.
In its 6th assessment report released in August 2021, the
Intergovernmental Panel on Climate Change ('IPCC') highlights the
catastrophic impact human activity is having on global warming and
its links to recent extreme worldwide weather patterns. This report
is timed to focus the minds of the governments, across 195
countries, ahead of the UN Climate change conference (COP26) in
October this year and encourage multilateral agreement to
significantly reduce greenhouse gas emissions. This potentially
will have a wide-ranging impact on the conduct of business and our
daily lives.
Cenkos has performed well in the first six months of the year
and since the period end, has completed a number of equity
fundraisings for our clients, including two IPOs. This could
suggest the current favourable market conditions are set to
continue. Alternatively, although our current pipeline is
encouraging and we continue to win new clients, we recognize that
our performance is reliant on the success of Government efforts to
stimulate the economy; any commitments made at COP26 resulting in
opportunities for Growth companies rather than having a negative
impact on the economy; and the continued success of the vaccination
program in combatting COVID-19 and any new variants, meaning
further measures to control the spread of the virus such as
lockdowns are not required.
Whilst it is not possible to quantify the overall impact of the
events, 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. Management
continues to monitor the impact of the COVID-19 pandemic and
Climate Change 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. 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.
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.
2. Dividends
Amounts recognised as distributions to equity holders in the
year:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP 000's GBP 000's GBP 000's
------------------------------------------------- ----------- ----------- ------------
Amounts recognised as distributions to equity
holders in the period:
---------------------------------------------------- ----------- ----------- ------------
Final dividend for the year ended 31 December
2020 of 2.5p (2019: 1.0p) per share 1,280 515 515
---------------------------------------------------- ----------- ----------- ------------
Interim dividend for the period to 30 June 2020
of 1.0p (2019: 2.0p) per share - - 512
1,280 515 1,027
------------------------------------------------- ----------- ----------- ------------
The proposed interim dividend for 30 June 2021 of 1.25p (30 June
2020: 1.0p) per share was approved by the Board on 8 September 2021
and has not been included as a liability as at 30 June 2021. The
dividend will be payable on 4 November 2021 to all shareholders on
the register at 8 October 2021.
3. Events after the reporting period
There were no material events to report on that occurred between
30 June 2021 and the date at which the Directors signed the Annual
Report.
4. Market abuse regulation (MAR) disclosure
This announcement contains certain inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
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END
IR DKFBKFBKDCCK
(END) Dow Jones Newswires
September 09, 2021 02:00 ET (06:00 GMT)
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