Final Results

RNS Number : 6459H

Cenkos Securities PLC

25 February 2010

 



Cenkos Securities plc ("the Company") together with its subsidiaries ("the Group")

ANNUAL FINANCIAL RESULTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2009

Cenkos Securities plc today announced its audited final results for the year to 31 December 2009. The highlights of the results comparing them with the prior year are:

Financial highlights

·      Revenues up by 64% to £46.5 million (2008: £28.3 million).

·      Operating profit before non-recurring items increased by 170% to £10.8 million (2008: £4.0 million).

·      Operating profit increased by 48% to £5.9 million (2008: £4.0 million).

·      Profit before tax and non-recurring items increased by 122% to £11.3 million (2008: £5.1 million).

·      Profit before tax increased by 47% to £7.5 million (2008: £5.1 million).

·      Diluted earnings per share before non-recurring items up by 133% to 11.4p (2008: 4.9p).

·      Diluted earnings per share after non-recurring items up by 27% to 6.2p (2008: 4.9p)

·      The business has generated net cash flow of £28.1 million (2008: £1.6 million) from operating activities, resulting in a year-end cash balance of £20.0 million (2008: £6.3 million).

·      £10.6 million was received by the Group on 17 July 2009 from the paying up of previously partly paid shares.  This increased the Group's regulatory capital by £8.3 million and so enabled it to more fully distribute retained earnings at the interim stage.

·      The Board proposes a final dividend of 5p per share compared to last year's final dividend of 5p per share.  This makes a total dividend of 20p. 

Business highlights

·      Continued success in attracting new institutional and corporate clients helping to grow the Cenkos franchise.

·      Taking advantage of the unsettled market conditions and concerns with the banking sector in order to recruit high quality individuals to our existing teams.

·      The successful establishment during the year of a credit markets team.

·      We continue to raise funds for our clients even though conditions in equity capital markets continue to be very fragile - Total of £951 million raised in the year (2008: £509 million).

·      In February 2010 the Company was appointed sole UK bookrunner and UK listing sponsor to the Anthony Bolton-managed Fidelity China Special Situations Fund.

For further information please contact:

Simon Melling

Chief Executive Officer        020 7397 8900

Chairman's statement

I am pleased to announce a strong performance by Cenkos Securities plc (the "Company") and its subsidiaries (together the "Group") in the year to 31 December 2009.  The result represents a very significant recovery from the previous year.  Whilst there has been improvement generally with the economy creeping out of recession and rises in most stock market indices, for most of the year we are reporting on, market conditions have been at best fragile.

Global stock markets have risen significantly during the year but this has been driven on low volumes and possibly anticipates significant increases in corporate earnings that will be slow to come through.  As a result investors remain nervous and exceptionally averse to risk.  Good companies are still finding it difficult to raise funds either from the debt or equity markets.  In the United Kingdom there are major concerns over levels of government debt and its effect on future growth prospects.  We have also moved into a period of political uncertainty, which will only be removed by the expected general election in May 2010.  This means that confidence has stabilised at higher levels than last year but remains weak.

The lack of confidence affects the markets in which Cenkos operates.  However, even under these challenging conditions we were able to raise much needed capital for our clients.  This is illustrated by the fact that during the year we raised £951 million (2008: £509 million) for them.  We believe that our ability to perform in this area is based on our very strong links with the institutional investor community, aligned with a deep understanding of our corporate client base.

I am pleased to say that during the year we have continued to capitalise on our position in the market and as a result have been able to attract high quality individuals.  We believe these individuals will fit in well with the Cenkos culture and add value to the Group, thus enabling us to grow and diversify our income streams.  During the year we have not changed our basic remuneration policy.  Unlike a number of other finance sector organisations, we have not given any bonus guarantees.  We continue to believe that bonuses have to be justified by the individual's actual performance and contribution to the Group.  This approach to remuneration does not open us up to an increase in the Group's risk profile, as we do not take on long term liabilities and only pay bonuses when the Group is in receipt of the cash proceeds of a transaction.  Whilst continuing to adhere to the basic principle that the largest proportion of remuneration should be variable, we of course have to ensure that we still attract and retain high quality individuals.

I have been the Chairman of the Company for the past four years and I have informed the Board that I wish to stand down at the end of the AGM.  The Board have accepted this and Peter Sullivan will take over my position from that date.  Andy Stewart, the founder of your Company, has also decided to move to non-executive Deputy Chairman of your Company with immediate effect.  The Board has instigated a search for additional non-executive directors to add to the resources available for the management of the Company as it continues to grow.

I am pleased to announce that the Board proposes a final dividend of 5p per share compared to last year's final dividend of 5p per share.  This makes a total dividend of 20p for the year and reflects the Company's dividend policy of only retaining profits when the Board considers that it is required to fund the existing business or where attractive investment opportunities have been identified.

John Hodson

Chairman

25 February 2010

Business and financial review

We are very pleased to state that, due to our robust business model and the quality, dedication and experience of our employees, we have performed strongly, being profitable throughout the whole of the year.  This has been achieved by being able to raise money for our corporate clients even in the bleak early months of the year and has continued strongly in the slightly more benign conditions later in the year.  This performance is demonstrated by the fact that during 2009 Cenkos was ranked 3^rd in terms of secondary funds raised on AIM as Nomad, with only JP Morgan Cazenove and KBC Peel Hunt being placed higher.  This is in my view a remarkable achievement for a company that is less than five years old.

Total revenue for the period was up 64% to £46.5 million (2008: £28.3 million), which, given the prevailing economic climate is a very strong result and bodes well for our future development.  A number of our competitors, both independents and subsidiaries or divisions of banks, have not fared as well as we have through the recent downturn.  This puts us in a strong position to continue our organic growth by adding high quality individuals to our existing teams as well as recruiting new teams with complementary income streams and who are seeking the entrepreneurial ethos of Cenkos.  Any expansion will only take place in areas that we understand and with which we are familiar.

The table below shows a breakdown of revenue by segment.

	2009 £000's	2008 £000's
Corporate Broking and Advisory	35,837	21,159
Institutional Equities	4,706	3,320
Fund and Wealth Management	5,915	3,796
	46,458	28,275

Corporate broking and advisory

This business segment includes the results of our small/mid cap, investment funds and credit market activities, including the results of our market making capability carried on to support these areas.  The segments revenue is made up of placing commission on fund raisings, corporate finance fees and retainer income, market making profits and commissions on secondary market transactions.  Revenue was up 69% from £21.2 million to £35.8 million and profits were up 60% from £10.1 million to £16.1 million.

While strong, the results have inevitably been affected by the general lack of equity capital-raising activity.  We are therefore pleased to announce that our clients raised through equity issues a total of £951 million (2008: £509 million).  These issues were secondary market transactions, which is not surprising given the almost total lack of primary market activity.  During the year we continued to increase the number of retained corporate clients and investment funds.  The Group was nominated adviser or corporate broker/financial adviser to 105 companies or trusts (2008: 103) as at 31 December 2009, with a market capitalisation of £13.4billion (2008: £13.0 billion).  In the year we also maintained the amount of M&A corporate finance fees as opposed to those related to placings, being involved in 19 transactions (2008: 13).

Our investment funds team provides a broad range of services to investment companies including primary and secondary sales, market making, research, corporate broking and corporate finance advice.  Their sales team services both institutional and wealth manager clients.  Its secondary activities have remained robust despite thin trading volumes, but primary sales opportunities have all but disappeared as investors have shunned new issues in favour of trading existing investment companies rated at discounts to net asset values.  However, in February 2010 we were appointed sole UK bookrunner and sponsor to Fidelity China Special Situations Fund.  This Fund is targeting a capital raising of £630 million.  Their corporate finance team has been involved heavily in restructuring work and in various equity alternative issues including investment company subscription shares and convertible bonds.

The Group continues to undertake market making activities in order to support the other services it provides to its clients.  The Group makes markets in the securities of all the companies where it has a broking relationship.  During the year we have taken the active decision to commit less of the Group's capital to this activity, which has reduced our market risk exposure significantly without adversely affecting the revenue generated.  The Group does not engage in proprietary trading and applies position limits and monitoring procedures to ensure controls.  The Group does from time to time take stock in lieu of fees and the market movement on these items is also included in this income stream.

During the year we recruited an experienced team of credit market experts.  The team delivers a professional execution service to financial institutions.  It focuses on structured products such as residential mortgage bonds, collateralised loan obligations and the financial and corporate bond markets.  All transactions are carried out on an agency basis.  The team joined us in April 2009 and made a positive contribution to the Group during the year.

Institutional Equities

The Institutional Equities team based in London provides research-driven investment recommendations to institutional clients.  While many of our clients continue to pay for our research services directly, more are choosing to transact business through Cenkos as well.  The demise of the trading capacity of the large international houses has levelled the playing field for other firms; what matters to institutional investors is being able to get their trades executed (this is no longer the domain of the larger broking firms).  In the same way that Cenkos specialises in researching certain areas of the market, we now specialise in facilitating business in these same areas.

The year saw us adding expertise in technology, building and construction as well as strengthening our retail team.  We now cover research in the areas of business services, retail, food retail, technology and building/construction and look to add to that capability when the opportunity arises.  These additions saw the Company increase revenues in this segment by 42% from £3.3 million to £4.7 million.  Due to the significant investment in high quality individuals in this area, the segmental profit has remained at £1.9 million.  This reflects the inevitable time lag between individuals joining and being fully productive.

Our execution business within this segment is strictly focused on client facilitation.  We do not engage in proprietary trading.  We believe that the continued organic growth of this area will enhance Cenkos' overall service to its expanding client base.  It is also important to point out that the department's income also increases the proportion of recurring revenue coming into the Group.

Fund and Wealth Management

Our offshore fund and wealth management services are provided through Cenkos Channel Islands Limited, a 50% owned subsidiary based in Guernsey and its own subsidiary based in Jersey.  Varying levels of stockbroking services are offered, from fully discretionary to execution only, to high net worth individuals, financial intermediaries and institutions.  The team recruited in the second half of 2008 has been successfully integrated.  We are in the process of building an offshore asset management business, which made a positive contribution to the full year, having launched a number of funds.  The business during the year has grown both in terms of the number of clients and funds managed.  These now stand at 1,669 (2008: 1,150) and £779.4 million (2008: £476 million) respectively.

The onshore fund management business is provided by Cenkos Fund Management Limited, a 45% owned subsidiary.  This operation has an investment management agreement with an AIM-quoted fund.  The fund specialises in investing principally in unquoted companies where we see an exit route within six to thirty-six months.  A significant amount of the fund is invested and the company made a positive contribution to the Group during the year.

As a result of the significant progress made in this area, segmented revenue has increased by 55% to £5.9 million (2008: £3.8 million) and principally due to the operational gearing in these activities segmented profits have increased by 250% to £1.4 million (2008: £0.4 million).

Income Statements

We set out below an extract from the income statement.  This extract allows, in my view, a better understanding of the underlying performance of the Group as it removes the effects of the various transactions related to the paying-up and placing with institutions of a large number of our partly paid 'B' shares, and the implementation of the compensatory award plan 2009 as set out in Note 8.

	2009 £000's	2008 £000's
Revenue	46,458	28,275
Administrative expenses	(35,616)	(24,317)
Operating profit	10,842	3,958
Investment income - interest receivable	764	1,277
Finance costs - interest payable	(258)	(111)
Profit before tax	11,348	5,124

As can be seen, the Group's revenue was £46.5 million compared to last year's £28.3 million, representing an increase of 64%.  Profits before tax and non-recurring items are up 122% from £5.1 million to £11.3 million.  As mentioned in the Chairman's statement, this has been earned during a year of considerable uncertainty and when the UK economy has been in recession. 

Cenkos continues to pursue a policy of maintaining a low fixed cost base and a remuneration policy of low basic salaries and rewarding net income generation.  Our headcount has increased during the period and most of those recruits have been income generating.  Due to the implementation of the compensatory award plan 2009 included in Staff Cost within Administrative Expenses is the bonus paid to option holders, which amounts to £2.3 million.  This bonus is linked to dividends so is entirely dependent on the after tax profits of the Group and therefore totally variable.

Partly paid shares

As set out in our admission document and subsequent financial statements we partly paid 'B' shares held by employees, which at 31 December 2008 amounted to 18.7 million shares.  On 17 July 2009 10.6 million shares were paid up, resulting in a cash inflow of £10.5 million.  The shares under the terms of the original subscription agreement were converted into ordinary shares and listed.  The resulting shares were placed with a number of institutions.  The selling employees were granted options over the Company's shares, with the exercise price being the price at which the institutions bought the converted shares.  The employees also are entitled to receive a cash bonus equivalent to the dividend stream they would have received.  As a result of these transactions our regulatory capital has increased by £8.3 million and we have surplus operational capital. 

Balance Sheet and Cash Flow

As mentioned above, during the year we have reduced the amount of capital that we have committed to our market making activities.  This has led to net trading investments being reduced by 31% from £8.9 million to £6.1 million.  The Available for Sale Investments item is represented by our 3.2% holding in the share capital of PLUS Markets Group plc.  We currently hold very healthy cash levels at £20.0 million (2008: £6.3 million).  The year saw us produce a net cash flow from operating activities of £30.7 million (2008: £6.0 million).  This reflects higher cash profits after adjusting for non cash share based payments as well as our trade and other receivables being reduced by the receipt in July of £10.6 million from our partly paid 'B' shares as explained above.
The Group manages capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity. At present the Group has no gearing and it is the responsibility of the Board to review the Group's gearing levels on an ongoing basis. The Group has to retain sufficient capital to satisfy the UK Financial Services Authority's capital requirements.  These requirements vary from time to time depending on the business conducted by the Group.  As at 31 December 2009, the Group had a solvency ratio of 204% (2008: 194%) based on audited profits.

During the year we have fully implemented the new Internal Capital Adequacy Assessment Process (ICAAP) regime.  Our ICAAP has now been fully reviewed and is considered sufficiently robust by the FSA. The ICAAP process involved financial modelling of Cenkos' business model and subjecting it to a number of stress scenarios to ensure that the Group holds sufficient capital to weather most storms.

Dividend

As we have always stated, we only intend to retain sufficient capital and reserves to meet the Group's regulatory capital and operational cash. The Board is therefore proposing to pay a final dividend of 5p per share reflecting the Company's dividend policy and the performance of the Group in the six months from 1 July to 31 December 2009.  If approved at the Company's Annual General Meeting on 29 March 2010, the dividend will be paid on 1 April 2010 to all shareholders on the register at 5 March 2010.

People

Whilst the market in which we operate remains unsettled, the continued professionalism of our employees has enabled us to achieve the strong performance for the year.  We are proud to lead a group of such dedicated and talented individuals.  Their skill, commitment and determination will provide us with a solid platform on which to build our franchise.

We are today announcing a number of changes to the Board.  John Hodson has signified that he wishes to step down as Chairman at the end of the AGM. We would like to thank him for guiding Cenkos through its first years as a public company and for his personal support to me as Finance Director and new CEO.  We are pleased that Peter Sullivan has agreed to take on John's role and our executive team and I look forward to working with Peter to build on past successes.   Andy Stewart has decided to move to a non-executive role, as he wishes to devote more time to his family, following his son Paul's tragic accident, as well as to his charitable foundation activities.  Without Andy there would be no Cenkos and we know that everyone in the Company will join in expressing their gratitude for his vision and determination.

Jimmy Durkin left the Board of the Company on 25 November 2009 and we would like to take this opportunity to thank him for all his efforts during the years he served as a director.  We are very pleased to state that Jimmy continues to work for the Company and are sure will continue to make a valuable contribution to the Group.

Principal risks and controls

The principal risks and uncertainties currently faced by the Group are outlined below.  The risks outlined are those that the Group believes have the potential to have a significant detrimental impact on its financial performance and future prospects.  These risks should not be regarded as a comprehensive list of all the risk and uncertainties the Group may potentially face, which could adversely impact its performance. 

Economic conditions

The Group is generally dependent on the health of the financial markets and in particular the economic conditions in the UK.  The impact of poor economic conditions on the Group's clients and markets has the potential to adversely impact on the Group's financial performance and prospects.  Specific examples that could affect the Group include a reduced level of securities trading as well as a general decline in the number of new or secondary fundraising issues.  The Group has a business model that seeks to minimise the resulting impact of such scenarios by continually reviewing its cost base and more importantly by having a flexible remuneration structure which is predominantly geared to financial performance resulting in the Group having a low fixed remuneration cost base. 

Reputational risk

The Group believes that one of the greatest risks to the Group comes from the potential loss of its reputation. Whilst entrepreneurial employees are encouraged to develop new clients and streams of revenue, all new business is subject to a rigorous appraisal process from the New Business Committee to ensure that it meets the Group's strict criteria.  The Group also aims to demonstrate the highest level of integrity in all of its activities and Group Compliance as well as the Executive Management Committee instils awareness in all employees of the need to display the highest ethical standards and confidentiality in all the work that they undertake for the Group.

Employee risk

The Group's employees are its greatest asset and the future success of the Group depends on the Group's ability to attract and retain high quality employees.  Failure to recruit or retain such employees could significantly affect the performance of the Group.  The Group seeks to minimise this risk by rewarding employees through an overall remuneration package that is heavily geared towards performance and share-based payments that align the interests of the employees and shareholders.

Operational risk

Operational risk is the risk that the Group suffers a loss directly or indirectly from inadequate or failed internal processes, people and systems or from external events.  The Group has adopted a formal approach to operational risk event reporting, which involves the identification of an event, assessment of its materiality, analysis of the cause, the establishment of remedial action required and escalation to me as Chief Executive Officer and the Risk and Compliance Committee.  During this process Group Compliance and senior management closely ensure that this process is followed and that any significant operational risks and their controls are continually reviewed and assessed and where applicable corrective action plans are put in place.

Market risk exposure

The Group is exposed to market risk arising from its short-term positions in predominantly market making stocks.  The Group manages market risk by establishing individual stock limits and overall trading book limits.  There are daily procedures in place to monitor the utilisation of these limits.  These limits are reviewed on a continuous basis by me as Chief Executive Officer and also by the Group Risk and Compliance Committee, which meets monthly.

Liquidity risk

The Group has in place an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements.  The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.  Given the nature of the Group's business, the Group does not run any significant liquidity mismatches, financial liabilities are on the whole short-term and the Group has sufficient cash retained to cover all these liabilities.

Business continuity risk

There is a risk that any incident that the Group is affected by, directly or indirectly such as terrorism, disruption to utilities and services, office closures or pandemic occurrences, could cause possible damage to the Group's infrastructure or effect key employees, which in turn could affect the Group's reputation or cause financial loss.  The Group has in place controls to maintain the integrity and efficiency of its systems, while ensuring the sustainability of its operations despite a significant disruption.  The Group continuously reviews its business continuity planning, and has disaster recovery facilities in place in order to mitigate any substantial disruption to its operations.

Outlook

We do not anticipate that the present global conditions will change significantly in the near future.  From a UK perspective the consensus view is that 2010 will be a difficult year with uncertainties over the effect of the forthcoming General Election, withdrawal of quantitative easing and potential inflationary pressures leading to raised interest rates.  As the financial performance of 2009 demonstrates, we are able to grow our business even in challenging economic times.

We have made a satisfactory start to the year and have undertaken a number of corporate and issuance transactions, raising over £119 million for our clients.  We believe that Cenkos is well positioned to expand its franchise so as to take advantage of more benign markets when they return.

Simon Melling

Chief Executive Officer

25 February 2010

Responsibility Statement

We confirm that to the best of our knowledge:

a) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of Cenkos Securities plc, and

b) the management report includes a fair review of the development and performance of the business and the position of Cenkos Securities plc and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Forward-looking statements

These financial statements contain forward-looking statements with respect to the financial condition, results, operations and businesses of Cenkos Securities plc.  Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct.  Such statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future.  There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts.  Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this statement.  The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Consolidated income statement for the year ended 31 December 2009
			1 January 2009 to 31 December 2009			1 January
			Before non	Non	After non	2008 to
			recurring	recurring	recurring	31 December
			item	item (note 8)	item	2008
		Notes	£ 000's	£ 000's	£ 000's	£ 000's
Revenue		3	46,458	-	46,458	28,275
Administrative expenses			(35,616)	(4,987)	(40,603)	(24,317)
Operating profit			10,842	(4,987)	5,855	3,958
Investment income - interest receivable		4	764	1,139	1,903	1,277
Finance costs - interest payable		5	(258)	-	(258)	(111)
Profit before tax		7	11,348	(3,848)	7,500	5,124
Tax		9	(2,553)	84	(2,469)	(1,404)
Profit for the year			8,795	(3,764)	5,031	3,720
Attributable to:
Equity holders of the parent			8,258	(3,764)	4,494	3,545
Minority interests			537	-	537	175
			8,795	(3,764)	5,031	3,720
Earnings per share
From continuing operations
Basic		11	11.40p		6.20p	4.88p
Diluted		11	11.36p		6.18p	4.88p
All amounts shown in the consolidated income statement derive from continuing operations of the Group.
The profit attributable to the Company in the year ended 31 December 2009 was £3,671,410 (31 December 2008: £3,337,910).
Consolidated statement of comprehensive income for the year ended 31 December 2009
			1 January 2009 to 31 December 2009			1 January
			Before non	Non	After non	2008 to
			recurring	recurring	recurring	31 December
			item	item	item	2008
			£ 000's	£ 000's	£ 000's	£ 000's
Profit for the year			8,795	(3,764)	5,031	3,720
Available-for-sale financial assets:
Gains/(losses) arising during the year			195	-	195	(2,780)
Tax relating to losses on Available-for-sale financial assets			-	-	-	761
Other comprehensive income for the year			195	-	195	(2,019)
Total comprehensive income for the year			8,990	(3,764)	5,226	1,701
Attributable to:
Equity holders of the parent			8,453	(3,764)	4,689	1,526
Minority interests			537	-	537	175
			8,990	(3,764)	5,226	1,701
Consolidated balance sheet as at 31 December 2009
				31 December	31 December	31 December
				2009	2008	2007
				£ 000's	£ 000's	£ 000's
Non-current assets
Property, plant and equipment				872	1,111	944
Available for sale investments				511	763	3,543
Deferred taxation				227	67	321
				1,610	1,941	4,808
Current assets
Trading investments - long positions				8,153	11,392	26,597
Trade and other receivables				36,357	41,493	56,763
Cash and cash equivalents				19,994	6,337	16,244
				64,504	59,222	99,604
Total assets				66,114	61,163	104,412
Current liabilities
Trading investments - short positions				(2,058)	(2,506)	(11,803)
Trade and other payables				(35,251)	(23,430)	(46,761)
				(37,309)	(25,936)	(58,564)
Net current assets				27,195	33,286	41,040
Non-current liabilities
Deferred tax liabilities				-	-	(761)
Total liabilities				(37,309)	(25,936)	(59,325)
Net assets				28,805	35,227	45,087
Equity
Share capital				727	727	726
Share premium account				22,700	22,700	22,700
Own shares				(2,037)	-	-
Revaluation reserves				(48)	(243)	1,776
Retained earnings				6,626	11,614	19,633
Equity attributable to equity holders of the parent
				27,968	34,798	44,835
Minority interests				837	429	252
Total equity				28,805	35,227	45,087
Consolidated cash flow statement for the year ended 31 December 2009
					1 January	1 January
					2009 to	2008 to
					31 December	31 December
					2009	2008
					£ 000's	£ 000's
Profit for the year					5,031	3,720
Adjustments for:
Finance income					(1,645)	(1,165)
Tax expense					2,470	1,404
Depreciation of property, plant and equipment					327	341
Share based payment expense					5,572	928
Operating cash flows before movements in working capital					11,755	5,228
Decrease in net trading investments					2,791	5,909
Decrease in trade and other receivables					4,560	15,198
Increase / (decrease) in trade and other payables					11,565	(20,358)
Net cash flow from operating activities					30,671	5,977
Interest paid					(258)	(111)
Tax paid					(2,358)	(4,272)
Net cash flow from operating activities					28,055	1,594
Investing activities
Interest received					1,946	1,348
Net proceeds from the part disposal of a subsidiary					6	-
Purchase of property, plant and equipment					(88)	(508)
Proceeds from the sale of available-for-sale investments					447	-
Net cash flows from investing activities					2,311	840
Financing activities
Dividends paid					(14,547)	(12,344)
Distributions made to Minority interests					(125)	-
Acquisition of own shares					(2,037)	1
Increase in investment in subsidiary					-	(20)
Issue of capital by subsidiary to minority interests					-	22
Net cash used in financing activities					(16,709)	(12,341)
Net increase/(decrease) in cash and cash equivalents					13,657	(9,907)
Cash and cash equivalents at beginning of year					6,337	16,244
Cash and cash equivalents at end of year					19,994	6,337

Consolidated statement of changes in equity for the year ended 31 December 2009
	Equity attributable to equity holders of the parent
	Share capital	Share premium	Own Shares	Available for sale reserve	Retained earnings	Total	Minority Interests	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
At 1 January 2008	726	22,700	-	1,776	19,633	44,835	252	45,087
Profit for the year	-	-	-	-	3,545	3,545	-	3,545
Other comprehensive income for the year	-	-	-	(2,019)	-	(2,019)	-	(2,019)
Total comprehensive income for the year	-	-	-	(2,019)	3,545	1,526	-	1,526
Shares issued	1	-	-	-	-	1	-	1
Interest acquired by minority interest	-	-	-	-	-	-	22	22
Increase of investment in subsidiary	-	-	-	-	-	-	(20)	(20)
Profit allocated to minority interests	-	-	-	-	-	-	175	175
Credit to equity for equity settled share based payments	-	-	-	-	928	928	-	928
Deferred Tax on share based payments	-	-	-	-	(148)	(148)	-	(148)
Dividends paid	-	-	-	-	(12,344)	(12,344)	-	(12,344)
At 31 December 2008	727	22,700	-	(243)	11,614	34,798	429	35,227
Profit for the year	-	-	-	-	4,494	4,494	-	4,494
Other comprehensive income for the year	-	-	-	195	-	195	-	195
Total comprehensive income for the year	-	-	-	195	4,494	4,689	-	4,689
Profit allocated to minority interests	-	-	-	-	-	-	537	537
Own shares acquired in the year	-	-	(2,037)	-	-	(2,037)		(2,037)
Interest acquired by minority interest	-	-	-	-	9	9	(4)	5
Credit to equity for equity settled share based payments	-	-	-	-	5,040	5,040	-	5,040
Deferred Tax on share based payments	-	-	-	-	16	16	-	16
Dividends paid	-	-	-	-	(14,547)	(14,547)	(125)	(14,672)
At 31 December 2009	727	22,700	(2,037)	(48)	6,626	27,968	837	28,805

Notes to the financial statements for the year ended 31 December 2009
1. Accounting policies
General information
Cenkos Securities plc is a company incorporated in the United Kingdom under the Companies Act 2006 (Company Registration No. 0521077).  The Group's principal activity is the provision of investment banking services. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates.
Basis of accounting
The accounting policies used in arriving at the figures in this announcement are consistent with those which were set out in the audited financial statements for the year ended 31 December 2009. Whilst the financial information included in this announcement is based on the company's financial statements which are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRSs. The Group's 2009 Statutory Accounts comply with IFRSs.
Adoption of new and revised standards
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements. Standards affecting presentation and disclosure IAS 1 (revised 2007) Presentation of Financial Statements IAS 1(2007) has introduced a number of changes in the format and content of the financial statements. In addition, the revised Standard has required the presentation of a third balance sheet at 31 December 2009 because the entity has applied certain changes in accounting policies retrospectively (see below). IFRS 8: Operating Segments IFRS 8 is a disclosure Standard that has resulted in a redesignation of the Group's reportable segments (see note 3). IFRS 7 Improving Disclosure about financial instruments The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments.   At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective: IFRS 1 (amended)/IAS 27 (amended) Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate IFRS 3 (revised 2008) Business Combinations IAS 27 (revised 2008) Consolidated and Separate Financial Statements IAS 28 (revised 2008) Investments in Associates IFRIC 17 Distributions of Non-cash Assets to Owners The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
No individual income statement and related notes are published for the Company as provided by the exemption under section 408 of the Companies Act 2006.
Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All intra-group transactions, balances, income and expenses are eliminated on consolidation. 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 Business and Financial Review. The Directors have considered forecasts taking account of the current uncertain market conditions which demonstrate that the Group shall continue to operate within its own resources without recourse to the banking facilities available to it. The forecasts used for this exercise are based on various assumptions regarding expected levels of income and cost.  They have stress tested these basic assumptions and this testing reveals that the Group can maintain acceptable cash levels even if it relies only on recurring revenue streams and maintains its existing cost base. A major factor allowing this to be the case is the flexible nature of the Group's performance related remuneration policy.
As a result, the Directors believe, that at the time of approving the financial statements the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook and that the  Company and the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they consider it appropriate to adopt the going concern basis in preparing the annual report and accounts.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial Assets
Investments are recognised and derecognised on trade date when the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as fair value. Financial assets are classified into the following specified categories: financial assets as 'at fair value through profit or loss' (FVTPL), 'available-for-sale', and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial assets at fair value through profit or loss
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.
Trading investments pertain to investment securities which are held for trading purposes. These investments comprise both long and short positions and are initially measured at fair value excluding transaction costs. Subsequently and at each reporting date, these investments are measured at their fair values, with the resultant gains and losses arising from changes in fair value being taken to the income statement. Trading investments include securities and options over securities which have been received as consideration for corporate finance services rendered.
Financial assets are classified as financial assets at FVTPL where the Group acquires the financial asset principally for the purpose of selling in the near term, the financial asset is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit taking as well as all derivatives that are not designated and effective hedging instruments. Financial assets at fair value through profit or loss are stated at fair value, with any resulting gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
Available-for-sale investments
Listed shares held by the Group that are traded in an active market are classified as available for sale investments and are initially measured at fair value, including transaction costs. At each reporting date, these investments are measured at their fair values and the resultant gains and losses, after adjusting for taxation, are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period.
Trade and other receivables
Market and client receivables are measured at fair value. Unpaid share premium and loans due from staff are initially measured at fair value and measured at amortised cost at each subsequent reporting date. All other debtors are measured at amortised cost using the effective interest method, less any impairment. Appropriate allowance for estimated irrecoverable amounts is recognised in the profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Impairment of financial assets
Financial assets, other than those held for trading purposes or held at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For loans and receivables the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities
Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL upon initial recognition. A financial liability is classified as held for trading if:
•    it has been incurred principally for the purpose of disposal in the near future; or
•    it is part of an identified portfolio of financial instruments that the Group manages together and has a recent pattern of short term profit taking; or
•    it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the Group is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
Other financial liabilities
Trade payables are initially measured at fair value. At each reporting date, these trade payables are measured at amortised cost using the effective interest rate method.
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Derivative financial instruments
The Group has no significant exposure to derivative financial instruments but will occasionally enter into futures to manage its exposure to market risk.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date.  Gains and losses arising during the period on transactions denominated in foreign currencies are treated as normal items of income and expenditure in the income statement.
Investments in subsidiary undertakings
Investments held as fixed assets are stated at cost, less any provision for diminution in value.
Operating leases
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment.  Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its estimated useful life as follows:
Leasehold improvements:	Ten years
Fixtures and fittings:	Three years
IT equipment:	Three years
The carrying values of property, plant and equipment are subject to annual review and any impairment is charged to the income statement.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year.  Taxable profits differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.  Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales related taxes.
Revenue comprises fees for corporate finance advisory services which are taken to the income statement when the services are performed. Revenue also comprises profits on dealing operations, being gains less losses on shares, arrived at after taking into account attributable dividends and directly related interest, together with commission income receivable.
Interest income is recognised at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.
Revenue includes the fair value of options over securities which have been received as consideration for corporate finance services rendered.
Segment reporting
IFRS 8 requires that an entity disclose financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments.  These operating segments are identified on the basis of internal reports that are regularly reviewed by the Chief Executive Officer to allocate resources and to assess performance. Using the Group's internal management reporting as a starting point the reporting segments set out in note 3 have been identified.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based payment. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Stock borrowing collateral
The Group enters stock borrowing arrangements with certain institutions which are entered into on a collateralised basis with securities or cash advanced or received as collateral. Under such arrangements a security is purchased with a commitment to return it at a future date at an agreed price. The securities purchased are not recognised on the balance sheet and the transaction is treated as a secured loan made for the purchase price. Where cash has been used to affect the purchase, the cash collateral amount is recorded as a pledged asset on the balance sheet. Where trading investments have been pledged as security these remain within trading investments and the value of the security pledged disclosed separately except in the case of short-term highly liquid assets with an original maturity of three months or less, which are reported within the cash and cash equivalents with the value of security pledged disclosed separately.
2. Critical accounting judgement and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of judgements, 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 estimates. The estimates and assumptions that have a significant effect on the carrying amounts of assets and liabilities are set out below:
a) Equity-settled share-based payments
The fair value of share based payments is calculated by reference to a Monte Carlo simulation model. Inputs into the model are based on management's best estimates of appropriate volatility, discount rate and share price growth.
b) Valuation of investments
Trading investments include options over securities which have been received as consideration for corporate finance services rendered. The fair values of these investments have been calculated by reference to a Monte Carlo simulation model. Inputs into the model are based on management's best estimates of appropriate volatility, discount rate and share price growth.
c) Bad debt policy
The Group regularly reviews all outstanding balances including the unpaid amounts relating to the partly paid "B" shares and provides for amounts it considers irrecoverable.
3. Business and geographical segments
Adoption of IFRS 8, Operating Segments
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business and geographical), using a risks and returns approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. As a result, following the adoption of IFRS 8, the identification of the Group's reportable segments has changed.
Products and services from which reportable segments derive their revenues
In prior years, segment information reported externally was analysed on the basis of business segments and geographical location. However information reported to the Group's Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is more specifically focussed on the nature of products and services for each type of activity. Based on this the Group has identified three reportable segments and the following products and services provided by these segments:
Corporate broking and advisory
This segment provides corporate finance, corporate broking and market making services to small to mid cap companies and investment funds.
Institutional Equities
The institutional equities team provides research driven investment recommendations and execution capabilities to institutional clients.
Fund and Wealth Management
Offshore wealth management and stockbroking services are primarily provided through Cenkos Channel Islands Limited.
Our fund management business is primarily provided by Cenkos Fund Management Limited.
An analysis of the group's revenue and result by reportable segment is as follows:
			1 January 2009 to 31 December 2009
			Corporate		Fund
			Broking and	Institutional	and Wealth	Group
			Advisory	Equities	Management	Total
Segment revenues and results			£ 000's	£ 000's	£ 000's	£ 000's
Corporate finance			25,157	-	5	25,162
Corporate broking & market making			9,114	-	-	9,114
Research fees & commission			1,566	4,706	-	6,272
Management fees & stockbroking services			-	-	5,910	5,910
Segment revenue			35,837	4,706	5,915	46,458
Administrative expenses			(19,778)	(2,850)	(4,540)	(27,168)
Segment results			16,059	1,856	1,375	19,290
Unallocated Administrative expenses						(13,435)
Operating Profit						5,855
Investment income - interest receivable						1,903
Finance costs - interest payable						(258)
Profit before tax						7,500
Tax						(2,469)
Profit for the year						5,031
	As at 31 December 2009
	Corporate		Fund
	Broking and	Institutional	and Wealth	Segment		Group
	Advisory	Equities	Management	Total	Unallocated	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Other segment information:
Assets	9,688	-	11,230	20,918	45,196	66,114
Liabilities	(2,058)	-	(9,080)	(11,138)	(26,171)	(37,309)
Depreciation and amortisation	-	-	60	60	267	327
Additions to Non-current assets	-	-	13	13	75	88
Segment assets have been allocated on the basis of the internal reports received by the Chief Executive for the purposes of monitoring segment performance and allocating resources between segments
			1 January 2008 to 31 December 2008
			Corporate		Fund
			Broking and	Institutional	and Wealth	Group
			Advisory	Equities	Management	Total
Segment revenues and results			£ 000's	£ 000's	£ 000's	£ 000's
Corporate finance			20,272	-	161	20,433
Corporate broking & market making			(434)	-	-	(434)
Research fees & commission			1,322	3,320	-	4,642
Management fees & stockbroking services			-	-	3,634	3,634
Segment revenue			21,159	3,320	3,795	28,275
Administrative expenses			(11,103)	(1,454)	(3,441)	(15,998)
Segment results			10,056	1,866	354	12,277
Unallocated Administrative expenses						(8,319)
Operating Profit						3,958
Investment income - interest receivable						1,277
Finance costs - interest payable						(111)
Profit before tax						5,124
Tax						(1,404)
Profit for the year						3,720
	As at 31 December 2008
	Corporate		Fund
	Broking and	Institutional	and Wealth	Segment		Group
	Advisory	Equities	Management	Total	Unallocated	Total
Other segment information:	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Assets	12,895	-	14,525	27,420	33,743	61,163
Liabilities	(2,506)	-	(13,435)	(15,941)	(9,995)	(25,936)
Depreciation and amortisation	-	-	50	50	291	341
Additions to Non-current assets	-	-	139	139	369	508
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 1. Segment profit represents the profit earned by each segment without allocation of the central administration costs, investment revenue and finance costs, and income tax expense. This is the measure reported to the Group's Chief Executive Officer for the purpose of resource allocation and assessment of segment performance.
An analysis of the group's revenue by geographical location is as follows:
Geographical information	1 January 2009 to 31 December 2009			1 January 2008 to 31 December 2008
	United	Channel	Group	United	Channel	Group
	Kingdom	Islands	Total	Kingdom	Islands	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Revenue (a)	41,839	4,619	46,458	25,411	2,864	28,275
Non-current assets	802	70	872	1,003	108	1,111
(a) Revenues are attributed on the basis of the entities location.
Major customers
The revenue generated from no one particular customer amounted to more than 10% of the Group's total revenue.
4. Investment income - interest receivable					1 January	1 January
					2009 to	2008 to
					31 December	31 December
					2009	2008
Interest income generated from:					£ 000's	£ 000's
Bank deposits					74	457
Other loans and receivables					1,829	820
					1,903	1,277
Interest income generated from other loans and receivables includes the recognition of the unwinding of the discount factor applied to the partly paid B shares, which amounted to £1,808,484 (2008: £794,885).
5. Finance costs - interest payable
					1 January	1 January
					2009 to	2008 to
					31 December	31 December
					2009	2008
					£ 000's	£ 000's
Interest on bank overdrafts and loans					258	111
6. Staff costs
					1 January	1 January
					2009 to	2008 to
					31 December	31 December
					2009	2008
					£ 000's	£ 000's
Staff costs comprise:
Wages and salaries					21,445	13,811
Social security costs					3,007	1,802
Share based payments					5,784	1,125
					30,236	16,738
The group does not operate any pension schemes.
The average number of employees (including executive directors) was:
					2009	2008
					No.	No.
Corporate finance					11	10
Corporate broking					71	59
Administration					41	28
					123	97
					£ 000's	£ 000's
The total emoluments of the highest paid director serving during the year were:					969	608
7. Profit for the year
Profit for the year has been arrived at after charging/(crediting):					1 January	1 January
					2009 to	2008 to
					31 December	31 December
					2009	2008
					£ 000's	£ 000's
Operating lease rentals					626	625
Auditors' remuneration (refer to analysis below)					171	114
Depreciation of property, plant and equipment					327	341
Staff costs (see note 6)					30,236	16,738
Change in fair value of financial assets designated as at fair value through profit or loss					(320)	503
Costs associated with aborted takeover bid					-	100
The analysis of auditors' remuneration is as follows:					£ 000's	£ 000's
Fees payable to the Company's auditor for the audit of the Group's annual accounts and consolidation					102	86
Fees payable to the Company's auditor for other services:
- The audit of the Company's subsidiaries, pursuant to legislation					41	13
Total Audit Fees					143	99
- Other services, pursuant to legislation
Half year review					28	15
					171	114
8. Non-recurring item
Changes to the B share employee incentive scheme
				1 January		1 January
				2009 to		2008 to
				31 December		31 December
				2009		2008
				£ 000's	£ 000's	£ 000's
Charge relating to the extension of repayment terms of the remaining B share loans				532
Fair value of options awarded under the Compensatory Award Plan 2009				4,455
Administrative Expenses					4,987	-
Credit relating to the acceleration of the discount due to the early repayment of the				(1,139)
B share loans where the shares were either placed or transferred to the EBT
Investment Income - interest receivable					(1,139)	-
					3,848	-
The following events occurred during the current year in relation to the B shares:
• on 21 May 2009, at the AGM, the Company resolved to extend the repayment term of the Unpaid share premium and loans due from staff from 1 July 2011 to 1 July 2013; • on 17 July 2009 the loans relating to 10.6 million B shares were repaid and the shares listed; and • on 22 October 2009, the loans relating to a further 1.43 million shares were repaid and the shares transferred to the Cenkos Securities Employee Incentive Trust. These changes to the expected cash flows have been reflected in the adjustments made to the carrying amount of the loans as at 31 December 2009 and result in a credit of £1,139,005 from the acceleration of the discount due to the early repayment of the loans relating to the shares listed and a debit of £532,404 from the extension of the repayment term of the remaining loans.
The events detailed above were the result of three options offered to the holders of B shares. These were to:
1. Continue to hold some or all of their B shares. 2. Transfer a portion of their converted B shares to Cenkos Securities Employee Incentive Trust (CSEIT), after settling the loan associated with the unpaid portion of the shares. 3. Place some or all of the converted B shares to third-party institutional investors, after settling the loan associated with the unpaid portion of the shares.
Where a B shareholder either transferred the converted B shares to the CSEIT or placed them with the third-party institutional investor, they became eligible for an award under the Compensatory Award Plan 2009 and entitled to a cash bonus under the Compensatory Award Phantom Dividend plan 2009.
The Compensatory Award Plan entitled the B shareholder to an award of options equivalent to the number of B shares transferred or placed at the transfer or placing price. These options are detailed below:
					2009
	Date of Grant & Vesting	Date of Expiry		Remaining contractual life, months	Number of shares options	Exercise price (in £)
Granted under the Compensatory Award Plan for shares placed	Jul-09	Jul-19		114	9,378,870	1.15
Granted under the Compensatory Award Plan for shares transferred	Oct-09	Oct-19		117	1,428,750	1.69
					10,807,620
The Group uses the Monte-Carlo Simulation model to estimate the fair value of the options. The inputs to the model are as follows:
					2009
					£
Expected volatility					30%
Expected share price growth					5%
Discount rate					25%
Expected volatility was determined by calculating the 20-day moving average of the share price since flotation. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.
These options vest immediately, so the estimated fair value of £4,454,457 is recognised as an expense, at the date of grant, by the Group.
The Compensatory Award Phantom Dividend plan 2009 entitles the B shareholder to a cash bonus equivalent to the amount of any dividend per share that the Company pays to ordinary shareholders multiplied by the number of share options awarded under the Compensatory Award Plan. This bonus is charged as an expense from the date of approval of a dividend by the Board.
9. Tax
The tax charge comprises:			1 January 2009 to 31 December 2009			1 January
			Before non	Non	After non	2008 to
			recurring	recurring	recurring	31 December
			item	item	item	2008
			£ 000's	£ 000's	£ 000's	£ 000's
Current tax
United Kingdom corporation tax at 28% (2008 - 28.5%) based on the profit for the year			2,967	-	2,967	1,391
Overseas tax charge borne by subsidiaries operating in other jurisdictions			-	-	-	6
Adjustment in respect of prior period
United Kingdom corporation tax			(345)	-	(345)	(99)
Overseas tax charge borne by subsidiaries operating in other jurisdictions			(9)	-	(9)	-
Total current tax			2,613	-	2,613	1,298
Deferred Tax
Credit on account of timing differences			(60)	(84)	(144)	-
Charge on account of timing differences			-	-	-	106
Total deferred tax			(60)	(84)	(144)	106
Total tax on profit on ordinary activities			2,553	(84)	2,469	1,404
The tax charge for the year differs from that resulting from applying the standard rate of UK corporation tax of 28% (2008: 28.5%) to the profit before tax for the reasons set out in the following reconciliation.
			1 January 2009 to 31 December 2009			1 January
			Before non	Non	After non	2008 to
			recurring	recurring	recurring	31 December
			item	item	item	2008
			£ 000's	£ 000's	£ 000's	£ 000's
Profit on ordinary activities before tax			11,349	(3,848)	7,501	5,124
Tax on profit on ordinary activities at the UK corporation tax rate of 28.5% (2007: 30%)			3,178	(1,077)	2,101	1,460
Tax effect of:
Depreciation in excess of capital allowances			18	-	18	25
Expenses that are not deductible in determining taxable profits			374	1,396	1,770	411
Different tax rates of subsidiaries operating in other jurisdictions			(280)	-	(280)	(150)
Income not subject to corporation tax			(307)	(319)	(626)	(396)
Adjustment for IFRS2 relating to staff options			(60)	(84)	(144)	106
Adjustment for IFRS2 relating to staff options due to tax rate change			-	-	-	-
Tax effect of utilisation of losses not previously recognised			(25)	-	(25)	47
Adjustment in respect of prior period			(345)	-	(345)	(99)
				-
Tax expense for the year			2,553	(84)	2,469	1,404
In addition to the amount credited to the income statement, deferred tax relating to the fair value of the Group's available-for-sale investments amounting to nil has been credited directly to equity (2008: £761,216 charged directly to equity) and deferred tax relating to share-based payments amounting to £15,639 has been credited directly to equity (2008: £148,062 charged directly to equity).
			Before non	Non	After non	2008 to
			recurring	recurring	recurring	31 December
			item	item	item	2008
Deferred tax			£ 000's	£ 000's	£ 000's	£ 000's
Arising on unrealised gain on available-for-sale investment			-	-	-	(761)
Arising on share-based payments			16	-	16	(148)
Tax expense for the year			16	-	16	(909)
10. Dividends
Amounts recognised as distributions to equity holders in the year:					1 January	1 January
					2009 to	2008 to
					31 December	31 December
					2009	2008
					£ 000's	£ 000's
Final Dividend for the year ended 31 December 2008 of 5p (December 2007: 12p) per share					3,637	8,711
Interim dividend for the period to 30 June 2009 of 15p (June 2008: 5p) per share					10,910	3,633
					14,547	12,344
A final dividend of 5p per share has been proposed for the year ended 31 December 2009 (December 2008: 5p).
11. Earnings per share
The calculation of the basis and diluted earnings per share is based on the following data:
			1 January 2009 to 31 December 2009			1 January
			Before non	Non	After non	2008 to
			recurring	recurring	recurring	31 December
			item	item	item	2008
			£ 000's	£ 000's	£ 000's	£ 000's
Earnings
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent			8,258	(3,764)	4,494	3,545
Effect of dilutive potential ordinary shares:
Share options			-	-	-	-
Earnings of the purposes of diluted earnings per share			8,258	(3,764)	4,494	3,545
					No.	No.
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share					72,442,817	72,616,990
Effect of dilutive potential ordinary shares:
Share options					234,906	95,060
Weighted average number of ordinary shares for the purpose of diluted earnings per share					72,677,723	72,712,050
The denominators for the purposes of calculating both basic and diluted earnings per share have been adjusted to reflect the sub-division of shares on 31 October 2006. The weighted average number of shares considered for the current year also includes the total number of B shares, even though they are partly paid shares, as these shares are entitled to a full dividend payout. On 22 October 2009, 1,428,750 shares were transferred to the Cenkos Securities Employee Investment Trust. These shares are held by the trust in treasury and have been included in the weighted average number of shares calculation up to this date.
12. Contingent liabilities
Crema v Cenkos Securities plc
During the reporting period, a sub-broker instigated proceedings against Cenkos Securities Plc for payment of a commission he claimed was due to him for assisting Cenkos in introducing investors to an investee company. The claim amounts to £882,000 plus interest.  Cenkos has robustly defended the claim on the basis that it has not been paid by the investee company and therefore under the terms of the agreement with the sub-broker is not liable to pay the sub-broker. In the same proceedings the sub-broker also advanced an alternative claim that Cenkos was negligent in failing to take steps to ensure that it was paid by the investee company. Cenkos has also robustly defended this alternative claim. The case went to trial in the High Court in London from 1st to 8th February 2010 and judgment is anticipated in March/April 2010. After taking legal advice, the Directors are of the opinion that the basis of the claim is without foundation and other than Cenkos' legal costs incurred to date, no further provision has been made.
Bank Payroll Tax The Directors believe that Cenkos as an independent stockbroker is not the intended target of the Bank Payroll Tax ("BPT") and, when finally drafted, the clauses mentioned by the HMRC to remove brokers such as Cenkos from its scope will be included. We therefore do not believe that Cenkos will be a taxable company; however we do recognise that final legislation has not been drafted and further changes to policy may occur before it becomes law in 2010. If Cenkos were to be classed as a taxable company, based on the current draft legislation, then the company's liability to BPT based on its discretionary bonus is expected to be around £500k.
Additional Information
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498 (2) or (3) Companies Act 2006 or equivalent preceding legislation.

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