Final Results

RNS Number : 1873D

Cenkos Securities PLC

26 March 2014

 



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

ANNUAL FINANCIAL RESULTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2013

Cenkos Securities plc today announced its audited final results for the year to 31 December 2013. The highlights of the results, comparing them with the prior year, are:

Highlights

			2013	2012
Revenue from continuing operations		up 19%	£51.4m	£43.2m
Operating profit from continuing operations		up 63%	£10.6m	£6.5m
Profit before tax from continuing operations		up 53%	£10.7m	£7.0m
Basic and diluted earnings per share from continuing operations		up 92%	14.2p	7.4p
Basic and diluted earnings per share from continuing and discontinued operations		up 17%	14.2p	12.1p
Final dividend per share proposed Interim dividend paid 3.5p (2012: 3.5p)		up 113%	8.5p	4.0p
Cash		up 36%	£30.3m	£22.3m
Capital resources in excess of Pillar 1 and 2 regulatory capital  requirements - after share buy-backs		up 8%	£6.2m	£5.8m
Nominated adviser or corporate broker / financial adviser to	125 companies			119 companies

Commenting on the final results, Chief Executive Officer Jim Durkin noted:

"I am pleased to report a healthy performance for 2013. We have materially increased our profitability and earnings per share on continuing operations. We strengthened our position as one of the leading brokers and Nominated Advisers in London for growth companies. I would like to thank all of our clients and staff for their continued support.

We have made a very encouraging start to the new year with 2014 revenues to date being materially ahead of the same period in 2013 and the current pipeline is strong."

For further information contact:

Jim Durkin             020 7397 8900                        David Rydell         020 7861 3886                        Nick Donald          020 7991 1504

Chief Executive Officer                                        Pelham Bell Pottinger                                          HSBC (Nomad)

Cenkos Securities plc

STRATEGIC REPORT

Introduction

The Directors are pleased to present Cenkos' first Strategic Report. This includes an overview of our strategy, business model and how the business has performed, our financial position as at the year end and the principal risks to which the Company is exposed, as well as comments on future prospects for the business.    

We are pleased to report that revenues and profits were well ahead of last financial year as the economy showed signs of recovery in the second half of 2013. Cenkos is rated as one of the leading brokers in London for growth companies. Adviser Rankings' guide for January 2014 ranks the Company as the number one Nominated Adviser and the number two stockbroker by number of AIM clients.

The strong results have been achieved against a backdrop of recovering equity markets. Our business model ensures a relatively low fixed cost base and a remuneration structure highly geared to performance. We maintain a positive operating cash cycle and a limited exposure to credit and market risk. This, combined with the high quality, dedication and experience of our employees, has enabled Cenkos to produce this excellent performance.

Our strategy

The Company was founded in 2004 and over the past ten years has established a successful platform that has been profitable in every year of its existence and delivered strong returns to shareholders. Our prime strategy is to build from these solid foundations to become the principal UK institutional broker to growth companies admitted to trading or listed on a UK market. We aim to achieve this through: 

-       understanding the needs of our clients, enabling us to provide successful fund raising and advice through an innovative and entrepreneurial approach;

-       delivering sustainable, diversified and growing income streams;

-       adding high quality individuals to the teams; and

-       managing costs and risks carefully.

thereby providing value through earnings growth and attractive cash returns to shareholders.

Our business model

We provide a corporate broking and securities service to small and mid-cap growth companies across a wide range of industry sectors including investment funds. We focus on companies that seek admission of their shares to trading on AIM or the LSE's main market, or companies that are already listed on those markets. For growing companies that require access to capital and international exposure, AIM's flexibility, with its Nominated Adviser ("Nomad") arrangements, provides a firm foundation for financing and corporate development. We offer our clients advice and access to equity finance at all stages of their development.

Revenue streams

Cenkos earns fees from primary and secondary equity fund raising, acting as a key intermediary between growth companies or investment funds and institutional providers of capital. We aim to provide equity financing and strong and supportive shareholder lists for companies and healthy returns for institutional investors. Corporate finance fees are earned from providing strategic advice and regulatory guidance to clients, as well as advice on all forms of corporate transactions including fundraisings, mergers and acquisitions, disposals, restructurings and tender offers. Fees are also generated from acting as Nomad or broker or financial adviser to our corporate clients. Commission is earned for published equity research. Our experienced trading teams earn commission from market making and sales trading in equities on markets such as AIM and the LSE Official List.

As corporate broker, our clients' Boards engage us to:

-       create and maintain supportive shareholder registers;

-       provide an informed and effective interface with shareholders and potential investors;

-       provide appropriate dealing liquidity in our clients' shares; and

-       advise on all pertinent market and regulatory issues.

Management systems and controls

We operate an efficient and flexible business model, well adapted to a highly regulated environment. It is therefore important that we continue to maintain an appropriate and proportionate level of systems and controls, commensurate with our size and complexity. Our risk management processes are outlined in more detail in the Corporate Governance section of our Annual Report.

We manage our cost base carefully. We offer our client facing staff relatively low basic salaries but reward their performance based on factors that include their net income generation. This cost flexibility allows us to manage economic downturns better than many of our competitors who have higher levels of fixed or guaranteed pay. Further details on pay are disclosed in the Directors' Remuneration Report. We selectively use outsourcing partners to help us maintain this cost flexibility in areas where volumes can be unpredictable. Our settlement and core trading systems and associated support are outsourced.

Culture and people

Our success is based on maintaining experienced and stable teams, whose members build professional relationships and achieve results through a committed and entrepreneurial approach. We endeavour to remunerate our staff to a level which not only retains but also motivates them to perform in line with the longer-term growth objectives of the Company.

Our key objectives and key performance indicators ("KPIs")

Our key objectives are to:

-       grow the business through maintaining and increasing the number of corporate clients we advise, helping them achieve their strategies, e.g. through the provision of advice and fund raising capabilities, ensuring we have the right calibre and quantity of staff deployed to support this; and

-       reward our shareholders through ensuring that we are a profitable and generate a high return on equity business (within acceptable risk limits), leading to an attractive dividend yield and strong share price growth.

Our KPIs include, but are not limited to, measures such as:

-       profit before tax, earnings per share;

-       the size and quality of our corporate client base (Nomad / broker appointments); and

-       various key risk indicators, including capital resources and cash.

Our main KPIs are noted in the Summary Information section and are also commented on below.

Review of the year

Financial results

Overall performance

We are pleased to report that in 2013 we have materially increased our profitability and continued to grow our client base. As at 31 December 2013, we were Nomad, broker or financial adviser to 125 companies or trusts (2012: 119). Largely due to an improved period of trading - notably equity fundraising for our clients - full year revenues rose by 19% to £51.4 million when compared to 2012. We experienced a strong second half of 2013 when compared to the first half of 2013. Revenues and profit before tax for the second half of 2013 were £31.4 million and £7.6 million respectively as compared to H1 2013 revenues of £20.0 million and profit before tax of £3.1 million.

Profit before tax on continuing operations was £10.7 million (2012: £7.0 million). As noted below, this 53% increase reflected a strong rise in revenues partially offset by a rise in performance-related pay. This growth rate demonstrates the operational leverage of our business.

We continue to maintain a firm control over risk, enjoy healthy cash levels and remain well capitalised above the minimum regulatory requirements.

Revenues

Total revenue from continuing operations for the year increased by 19% to £51.4 million (2012: £43.2 million) due largely to a higher level of corporate activity - including fundraising - by our expanding list of corporate clients. As at 31 December 2013, we were Nomad or corporate broker / financial adviser to 125 companies (2012: 119).

This is a satisfactory result given the recovery that UK equity markets are now beginning to experience. During the year we completed 47 transactions, including 6 primary issuances.

We are ranked as one of the leading brokers in London for growth companies, as noted in Adviser Rankings' January 2014  'AIM Adviser Rankings Guide', where we were ranked top Nomad for Oil and Gas companies and second Nomad for both Financials and Industrial companies by number of AIM clients.

We make markets in the securities of all the companies where we have a broking relationship to support the other services we provide to our clients. We actively provide liquidity to the market and facilitate institutional business in both small and large cap equities. Our trading desks make markets in the shares of 341 (2012: 342) companies and investment trusts. We continue to actively restrict the amount of capital committed to this activity to limit market risk exposure without adversely affecting the revenue generated.

The pressure on secondary commissions shows no sign of relenting, but we are confident that we can prosper in this environment because of our flexible cost model in which remuneration is linked to net income. Our execution business is primarily focused on client facilitation. We believe that this offering continues to enhance Cenkos' overall service offering to our expanding client base.

Costs, profit and earnings per share

Costs of continuing operations rose by £4.2 million (11%) in the year, primarily driven by higher levels of staff costs including performance-related pay. Operating profit from continuing operations rose 63% to £10.6 million and profit before tax from continuing operations was up 53% to £10.7 million (2012: £7.0 million), reflecting that higher revenues were only partially offset by higher performance-related pay. Additionally, as noted in note 10 of these financial statements, payments to staff under the Compensatory Award Plan 2009 ("CAP") are triggered by the payment of a dividend to ordinary shareholders. Consequently, costs of £1.7 million have been recognised within administrative expenses in 2013 for this (2012: £1.1 million). The tax charge for the year from continuing operations was £2.1 million (2012: £1.9 million), which equates to an effective rate of tax of 20% (2012: 26%). This lower tax charge reflects both the fall in corporation tax rates in the year and a £0.5m deferred tax credit arising on staff share options due to the rise in the Company's share price by year end. Basic and diluted earnings per share from continuing operations rose by 92% to 14.2 pence (2012: 7.4p).

Discontinued operations

We sold our controlling interest in our offshore fund and wealth management business, Cenkos Channel Islands Limited ("CCIL" - now renamed "Ravenscroft"), in April 2012, reducing our stake from 50% to 10%. This 10% residual stake was then sold in October 2012. As noted in our 2012 Annual Report, we generated £3.3 million profit after tax on discontinued operations in 2012.

As described in note 3 of these financial statements, subsequent to these disposals, we changed the way our business is assessed and how performance is reviewed and consequently we have consolidated our reportable segments into one. This reflects the fact that we are managed as an integrated UK-based institutional stockbroking business.

Financial position and cash flow

As at 31 December 2013, our net trading investments were £9.4 million (2012: £6.9 million). Cash held at 31 December 2012 was £30.3 million (2012: £22.3 million). The year to 31 December 2013 saw an inflow of cash and cash equivalents of £8.1 million (2012 inflow: £8.3 million). The inflow in 2013 reflects a number of factors including our profitable trading in 2013 and the receipt of share premium due on partly-paid Cenkos B shares, offset partly by dividends paid to our shareholders.

Dividend and capital levels

We intend to retain sufficient capital and reserves to meet our regulatory capital and cash requirements, after taking into account likely future working capital needs and potential growth requirements. As at 31 December 2013, we had a capital resources surplus of £6.2 million (2012: £5.8 million) in excess of our Pillar 1 and 2 regulatory capital requirements. Surplus capital rose by £0.4 million when compared to 2012 due to profitable trading in 2013 and the receipt of £2.7 million of premiums to fully pay up 2.7 million Cenkos B shares, offset by dividends paid.

Since our flotation onto AIM in October 2006, we have paid out 76p in dividends prior to the 8.5p proposed final dividend for 2013 and bought back 9.3 million shares at a cost of £6.5 million for cancellation, thereby increasing the Company's prospective earnings per share. During the year, we bought back and cancelled 0.4 million shares at a cost of £0.3 million (2012: 8.9 million shares at a cost of £6.3 million). 0.3 million shares were purchased in the year by the Cenkos Securities Employee Benefit Trust ("EBT") at a cost of £0.3 million (2012: 1.3 million shares for £0.8 million). Additionally, the unpaid premium of £2.7 million due on the remaining 2.7 million B shares was received in the year. Whilst the B shares were not admitted to trading on AIM, upon payment of the required premium the B shares were converted into Ordinary shares and admitted to trading on AIM. The outstanding amounts due in respect of the B shares that had previously been issued have now been fully paid.

The Board proposes a final dividend of 8.5p per share (2012: 4p per share). This makes a total dividend of 12p for the year (2012: 7.5p). The payment of this final dividend will trigger payments to staff under the CAP of £2.0 million in the first half of 2014 (2012 final dividend of 4p increased staff costs by £1.0 million in the first half of 2013). In setting the level of the final dividend, the Board considered, inter alia, the £0.5 million non-cash deferred tax credit recognised in 2013 and the increase in payments due to staff in 2014 under the CAP scheme as compared to 2013, as well as regulatory capital and cash requirements, working capital needs and potential growth requirements.

Subject to approval at the Annual General Meeting to be held on 16 May 2014, the final dividend will be paid on 28 May 2014 to all shareholders on the register at 2 May 2014. In line with existing shareholder authorisation, the Board will continue to assess opportunities for share buy-backs and the funding of share purchases by the EBT where this is beneficial to shareholders.

People

The continued professionalism of our employees has enabled us to achieve a robust performance for the year.  We continue to look to recruit staff who are attracted by our culture and business model. We endeavour to remunerate our staff to a level and in a manner which not only retains but also motivates them to perform in line with the longer-term growth objectives of the Company. Their skill, commitment and determination will continue to provide us with a solid platform on which to continue to build our franchise.

Principal risks

We face a range of risks and uncertainties which could affect both our financial performance and the achievement of our strategic objectives. One of our key risks is that our income is dependent on the health of the financial markets and in particular the economic conditions of the UK and how that impacts equity fundraising. Our business model has been designed to minimise the impact of lower revenues by ensuring that performance-related pay also falls to help compensate for this. The primary economic environment in which we operate is the UK and the majority of our transactions are in UK-based equities. We therefore have limited direct exposure to the Eurozone or any material foreign exchange risk due to any weakness in Sterling.

Aside from the health of UK equity markets, the remaining risks outlined below are those that we believe have the potential to have a significant detrimental impact on our financial performance and future prospects. These risks should not be regarded as a comprehensive list of all the risks and uncertainties that the Company may potentially face which could adversely impact performance or future prospects. The key risk areas that could impact the Company's future performance - and how they are managed - are noted below, along with comments as to how our risk profile has changed in the year, where relevant.

Reputational risk

We believe that one of the greatest risks we face comes from the potential damage to our reputation. All new business proposals are subject to a rigorous appraisal process followed by consideration by the New Business Committee. This committee's remit is designed to ensure that new business proposals meet our strict criteria.

Operational risk

Operational risk is the risk that we will suffer a loss directly or indirectly from inadequate or failed internal processes, people, systems, or external events. Our control functions and senior management continually review our risk framework to ensure that it properly reflects the risks to which we are exposed and that any significant operational risks and their associated controls are reviewed, tested and assessed and, where applicable, corrective action plans put in place. There is also an ongoing process for identifying, evaluating and managing the significant risks we face, including fraud. Our low cost and responsive business model relies on consistent delivery from our key suppliers for our trading and settlement systems. We maintain regular dialogue and meetings with these suppliers and ensure there is appropriate oversight of the risks associated with outsourcing. We continuously review our business continuity plans, and have disaster recovery facilities in place in order to mitigate any substantial disruption to our operations.  In February 2014 our business continuity plan was tested. No issues of concern were raised in respect of this test.

Other specific operational risks that are material to our performance are regulatory risk, people risk and litigation risk. These are commented on in more detail below.

Regulatory risk

We have established a strong culture of regulatory and legal compliance to ensure adherence to applicable regulation, focusing particularly on our ongoing obligations and responsibilities as an AIM Nomad and a UK Listing Authority ("UKLA") Sponsor. We continue to ensure that the appropriate systems and controls, reporting, capital and liquidity requirements are in place to meet the ongoing obligations of an FCA regulated (BIPRU Investment) firm. As at 31 December 2013 our capital resources were £6.2 million (2012: £5.8 million) in excess of Pillar 1 and 2 regulatory requirements. In light of the increasing regulatory burden being placed on regulated entities such as ourselves, we continue to enhance our systems, processes and controls, including the implementation of new regulatory processes associated with Basel III / Capital Requirements Directive ("CRD") IV.

People risk

Our employees are our greatest asset and the future success of the Company depends on our ability to attract and retain high quality employees. We seek to minimise this risk by creating the right culture and working environment and by rewarding employees through an overall remuneration package that is geared towards performance and aims to align the interests of both employees and shareholders. We therefore continue to pursue a policy of maintaining a low fixed cost base including low basic salaries and rewarding net income generation, after consideration of relevant risk factors. Due to our size, we do not need to apply the regulatory changes that apply in 2014 to 'banker's bonuses' arrangements. Any future changes to this regulation may mean that we have to change the remuneration arrangements of certain members of staff. People risk is also mitigated via a senior management succession planning process overseen by the Remuneration Committee.

Litigation risk

There is always a risk that some form of litigious action may be taken against the Company. Before any decision to enter into litigation is made, the Board, senior management and our legal advisers will review all aspects of the case to assess and consider if it is in the best interests of the Company and ultimately the shareholders to either instigate proceedings or defend ourselves against any potential litigation.

Credit risk

Although our transaction fees are generally paid out of the proceeds of any funds raised, we face some credit risk in respect of collecting fees due for other advice provided, such as Nomad fees. We are exposed to limited credit risks in the normal course of business as our market making activities are carried out on a delivery versus payment basis. Hence any counterparty exposure here will manifest itself as either an operational risk (in the form of settlement risk), or a market risk in terms of an underlying exposure to equities. Overdue fees are reviewed regularly and appropriate action taken to ensure recoverability. The banks with which we deposit money are reviewed on an annual basis by the Board and are required to have at least an investment grade credit rating. A number of banks are used in order to limit the concentration risk in relation to cash deposits. Our credit risk materially reduced in the year as we received full payment for the share premium due on Cenkos' B shares.

Market risk

We are exposed to market risk arising from our short-term positions in predominantly market making stocks in AIM listed companies. To mitigate this risk we manage our market risk by establishing individual stock position limits and overall trading book limits. There are daily procedures in place to monitor any position limit excesses. These limits are reviewed on an ongoing basis by the Chief Executive Officer and also by the Risk and Compliance Committee. We do, from time to time, take shares in lieu of fees subject to appropriate internal signoffs. Some stocks traded on AIM are subject to low levels of underlying liquidity.

Liquidity risk

Liquidity risk is the risk that we are unable to fund our commitments as and when they arise. To mitigate this risk, we have put in place an appropriate liquidity risk management framework for the management of our short, medium and long-term funding and liquidity management requirements. The Board has oversight and approves the liquidity risk management framework and Individual Liquidity Adequacy Assessment at least annually. We also manage 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 our business, we do not run significant liquidity mismatches and our financial liabilities are on the whole short-term.

It is not anticipated that our risk profile will change materially in 2014.

Outlook

I am pleased to report a healthy performance for 2013. We have materially increased our profitability and earnings per share on continuing operations. We strengthened our position as one of the leading brokers and Nominated Advisers in London for growth companies. I would like to thank all of our clients and staff for their continued support.  

We have made a very encouraging start to the new year with 2014 revenues to date being materially ahead of the same period in 2013 and the current pipeline is strong.

Jim Durkin

Chief Executive Officer

25 March 2014

Responsibility statement

The Directors confirm that to the best of their knowledge:

-       the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

-       the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole.

Forward-looking statements

These financial statements contain forward-looking statements with respect to the financial condition, results, operations and businesses of the Company. Although the Company 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 2013
					2013	2012
				Note	£ 000's	£ 000's
Continuing operations
Revenue				3	51,433	43,155
Administrative expenses					(40,856)	(36,670)
Operating profit					10,577	6,485
Investment income - interest receivable				4	135	357
Gain on disposal of available-for-sale financial asset					-	170
Interest expense				5	(1)	(6)
Profit before tax from continuing operations for the year				7	10,711	7,006
Tax				8	(2,122)	(1,855)
Profit after tax from continuing operations for the year					8,589	5,151
Discontinued operations
Profit after tax from discontinued operations for the year				9	-	3,329
Profit for the year					8,589	8,480
Attributable to:
Equity holders of the parent					8,589	8,392
Non-controlling interests					-	88
					8,589	8,480
Earnings per share
From continuing operations
Basic and diluted				11	14.2p	7.4p
From continuing and discontinued operations
Basic and diluted				11	14.2p	12.1p
The profit attributable to the Company in the year ended 31 December 2013 was £9,542,922 (31 December 2012: £8,758,102).
Consolidated statement of comprehensive income for the year ended 31 December 2013
					2013	2012
					£ 000's	£ 000's
Profit for the year					8,589	8,480
Available-for-sale financial assets:
Mark-to-market gain on valuation of available-for-sale financial assets					-	170
Gain on disposal of available-for-sale financial assets transferred to income statement					-	(170)
Other comprehensive income for the year					-	-
Total comprehensive income for the year					8,589	8,480
Attributable to:
Equity holders of the parent					8,589	8,392
Non-controlling interests					-	88
					8,589	8,480
Consolidated statement of financial position as at 31 December 2013
						Restated
					2013	2012
					£ 000's	£ 000's
Non-current assets
Property, plant and equipment					387	550
Deferred tax asset					1,024	272
					1,411	822
Current assets
Trade and other receivables					19,349	15,534
Available-for-sale financial assets					1,080	1,000
Other current financial assets					13,706	9,786
Cash and cash equivalents					30,343	22,271
					64,478	48,591
Total assets					65,889	49,413
Current liabilities
Trade and other payables					(35,508)	(24,336)
Other current financial liabilities					(4,289)	(2,848)
					(39,797)	(27,184)
Net current assets					24,681	21,407
Total liabilities					(39,797)	(27,184)
Net assets					26,092	22,229
Equity
Share capital					635	638
Capital redemption reserve					93	90
Own shares					(3,228)	(2,945)
Retained earnings					28,592	24,446
Total equity					26,092	22,229
The 2012 figures have been restated to reflect the transfer of the nominal value of the shares purchased and cancelled by the Company to the capital redemption reserve.
The financial statements were approved by the Board of Directors and authorised for issue on 25 March 2014. They were signed on its behalf by:
Gerry Aherne			Jim Durkin
Chairman			Chief Executive Officer
25 March 2014			25 March 2014
Consolidated cash flow statement for the year ended 31 December 2013
					2013	2012
				Notes	£ 000's	£ 000's
Profit for the year					8,589	8,480
Adjustments for:
Net finance income					(134)	(351)
Tax expense				8	2,122	1,855
Depreciation of property, plant and equipment					311	331
Gain on disposal of available-for-sale financial asset					-	(170)
Gain on disposal of discontinued operation and change in fair value of interest retained before deduction of non-controlling interest					-	(1,586)
Non-controlling interest in net assets sold					-	(1,567)
Shares in lieu of fees and options received in kind					(1,335)	(2,898)
Share-based payment expense					138	335
Operating cash flows before movements in working capital					9,691	4,429
Adjustment for deconsolidation of subsidiaries					-	184
(Increase) / decrease in net trading investments					(1,212)	2,685
(Increase) / decrease in trade and other receivables					(3,742)	10,152
Increase in trade and other payables					10,406	297
Net cash flow from operating activities					15,143	17,747
Interest paid					(1)	(6)
Tax paid					(1,871)	(1,509)
Net cash flow from operating activities					13,271	16,232
Investing activities
Interest received					62	309
Purchase of property, plant and equipment					(148)	(92)
Net proceeds from sale of available-for-sale financial assets					-	1,170
Net proceeds from the sale of discontinued operations					-	848
Net cash (outflow) / inflow from investing activities					(86)	2,235
Financing activities
Dividends paid				10	(4,541)	(3,165)
Acquisition of own shares by Cenkos Securities Employee Benefit Trust					(283)	(755)
Acquisition of own shares for cancellation					(289)	(6,286)
Net cash used in financing activities					(5,113)	(10,206)
Net increase in cash and cash equivalents					8,072	8,261
Cash and cash equivalents at beginning of year					22,271	14,010
Cash and cash equivalents at end of year					30,343	22,271

Consolidated statement of changes in equity for the year ended 31 December 2013
	Equity attributable to equity holders of the parent
	Share capital	Capital redemption reserve	Own Shares	Available-for-sale reserve	Retained earnings	Total	Non-controlling interests	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
At 1 January 2012	728	-	(2,190)	-	25,142	23,680	1,405	25,085
Profit for the year	-	-	-	-	8,392	8,392	88	8,480
Mark-to-market gain on valuation of available-for-sale financial assets	-	-	-	170	-	170	-	170
Gain on disposal of available-for-sale financial assets transferred to income statement	-	-	-	(170)	-	(170)	-	(170)
Total comprehensive income for the year	-	-	-	-	8,392	8,392	88	8,480
Own shares acquired in the year	-	-	(755)	-	-	(755)	-	(755)
Own shares acquired in the year for cancellation	(90)	90	-		(6,286)	(6,286)		(6,286)
Share of profit/(loss) from discontinued operations attributable to non-controlling interests	-	-	-	-	-	-	(1,567)	(1,567)
Adjustment for capital contribution previously made from sale of discontinued operation	-	-	-	-	102	102	-	102
Credit to equity for equity-settled share-based payments	-	-	-	-	233	233	102	335
Other reserve movements	-	-	-	-	28	28	(28)	-
Dividends paid	-	-	-	-	(3,165)	(3,165)	-	(3,165)
At 31 December 2012 (Restated)	638	90	(2,945)	-	24,446	22,229	-	22,229
Profit for the year	-	-	-	-	8,589	8,589	-	8,589
Total comprehensive income for the year	-	-	-	-	8,589	8,589	-	8,589
Own shares acquired in the year	-	-	(283)	-	-	(283)	-	(283)
Own shares acquired in the year for cancellation	(3)	3	-	-	(289)	(289)	-	(289)
Credit to equity for equity-settled share-based payments	-	-	-	-	138	138	-	138
Credit to equity for day 1 valuation of acquired share options	-	-	-	-	12	12	-	12
Deferred tax on share-based payments	-	-	-	-	237	237	-	237
Dividends paid	-	-	-	-	(4,541)	(4,541)	-	(4,541)
At 31 December 2013	635	93	(3,228)	-	28,592	26,092	-	26,092
The 2012 figures have been restated to reflect the transfer of the nominal value of the shares purchased and cancelled by the Company to the capital redemption reserve.

Notes to the financial statements for the year ended 31 December 2013
1. Accounting policies
General information
Cenkos Securities plc is a company incorporated in the United Kingdom under the Companies Act 2006 (Company Registration No. 05210733).  These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates. The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and therefore has not produced a Company income statement or accompanying notes. Prior year comparatives have been amended to reflect: - the transfer of the nominal value of the shares purchased and cancelled by the Company from retained earnings to the capital redemption reserve. The impact of this is solely within total equity; and - to conform to the presentation in the current year of the disposal in 2012 by Cenkos of its entire holding in CFM and CCIL and the subsequent change in the way the business is assessed and performance reviewed. This is discussed further in note 3.
Basis of accounting
The Company's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, with the prior period being presented on the same basis.
Adoption of new and revised standards
During the year, a number of amendments to IFRS became effective and were adopted by the Company, none of which had a material impact on the Company's net cash flows, financial position, statement of comprehensive income or earnings per share.
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.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Company's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling party's share of changes in equity since the date of the combination. Losses applicable to the non-controlling party in excess of the non-controlling party's interest in the subsidiary's equity are allocated against the interests of the Company, except to the extent that the non-controlling party 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 a 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 Company's business activities, together with the factors likely to affect its future development and performance, the financial position of the Company, its cash flows and liquidity position are set out in the Strategic Report.
The financial statements of the Company have been prepared on a going concern basis as the Directors have satisfied themselves that, at the time of approving the financial statements and having taken into consideration the strength of the Company's statement of financial position and cash balances, the Company has adequate resources to continue in operational existence for at least the next 12 months.
Financial instruments
Financial assets and financial liabilities are recognised in the Company's statement of financial position when it becomes a party to the contractual provisions of the instrument.
Financial Assets
Financial assets 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 "at fair value through profit and loss". Financial assets are classified into the following specified categories: financial assets as "at fair value through profit or loss" (FVTPL), "held-to-maturity", "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. However, reclassification is possible when the criteria in IAS 39.50 are met. There were no reclassifications during the year.
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 to be held at FVTPL. Financial assets are classified as financial assets at FVTPL where the Company acquires the financial asset principally for the purpose of selling it in the near term, the financial asset is a part of an identified portfolio of financial instruments that the Company manages together and has a recent actual pattern of short-term profit taking, as well as all derivatives that are not designated as FVTPL and hedging instruments. Financial assets at FVTPL are stated at fair value, with any resulting gain or loss recognised in the income statement. The net gain or loss recognised in the income statement incorporates any dividend or interest earned on the financial asset.
Trading investment
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, which have been received as consideration for corporate finance and other services rendered.
Derivative financial assets
Derivative financial assets include equity options and warrants over listed securities earned by the Company as part of fee arrangements. The Directors consider that the initial valuation reflects fair consideration for the services provided. All gains and losses on subsequent valuations are recorded within revenue in the income statement.
Held-to-maturity investments
Debentures with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.
Available-for-sale investments
Listed shares and unlisted shares held by the Company 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 other comprehensive income, 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 debtors are measured at fair value. Unpaid share premium and loans due from staff are initially measured at fair value and amortised back to par using the EIR ("Effective Interest Rate") method. 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 asset's 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 Company 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 Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company 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 Company 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 Company 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 Company's documented risk management or investment strategy, and information about the Company 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.
Trade and other payables
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 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 Company derecognises financial liabilities when, and only when, the Company'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 Company are recognised at the proceeds received, net of direct issue costs.
Derivative financial instruments
The Company 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 income statement immediately.
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company 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.
Non-current assets held for sale and discontinued operations
Non-current assets and disposal subsidiaries classified as held-for-sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal subsidiaries are classified as held-for-sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal Company is available-for-immediate-sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. In the statement of comprehensive income, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Company retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income. Property, plant and equipment and intangible assets once classified as held-for-sale are not depreciated or amortised.
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 year on transactions denominated in foreign currencies are translated at the prevailing rate and included 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. Where a rent free period or discount is negotiated it is amortised over the period of the 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:	Remaining term of the lease
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 profit 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 Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting 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.
The carrying amount of deferred tax assets is reviewed at each reporting 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 Company 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 share issuance activities and corporate finance advisory services which are taken to the income statement at the point in time when, under the terms of the contract, the conditions have been met such that the Company is entitled to the fees specified. Revenue also comprises profits on dealing operations, being gains less losses, both realised and unrealised, on financial assets, 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.  Following the disposal in its entire holding in CFM and CCIL, as disclosed in the Company's 2012 Annual Report, the Company has changed the way the business is assessed and performance reviewed; consequently, Cenkos has consolidated its reportable segments into one. This reflects the fact that Cenkos is managed as an integrated UK institutional stockbroking business and although it has different revenue streams, its activities are considered to be subject to similar economic characteristics. The internal reports used by the Chief Executive Officer for the purpose of monitoring performance and allocating resources reflect that Cenkos is managed as a single business unit.
Share-based payments
The Company has applied the requirements of IFRS 2 Share-based payment. The Company 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 Company's estimate of shares that will eventually vest. At each balance sheet date, the Company 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.
Related party disclosures
Key management personnel comprise Directors of the Company as they are able to exert significant influence over the financial and operating policies of the Company.
Standards issued but not yet effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below.  The Company intends to adopt these standards, if applicable, when they become effective.
IAS 1 Presentation of items of Other Comprehensive income - Amendments to IAS 1
IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32
These amendments clarify the meaning of "currently has a legally enforceable right to set-off".  The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.  These amendments are not expected to impact the Company's financial position or performance and become effective for annual periods beginning on or after 1 January 2014.
IFRS 9 Financial Instruments
IFRS 9, as issued, reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB is addressing hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Company's financial assets, but will not have an impact on classification and measurements of the Company's financial liabilities. The Company will quantify the effect, in conjunction with the other phases, when the final standard including all phases is issued.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
These amendments are effective for annual periods beginning on or after 1 January 2014 provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. It is not expected that this amendment would be relevant to the Group, since none of the entities in the Group would qualify to be an investment entity under IFRS 10.
IFRIC Interpretation 21 Levies (IFRIC 21)
IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21 is effective for annual periods beginning on or after 1 January 2014. The Company does not expect that IFRIC 21 will have material financial impact in future financial statements.
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39
These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after 1 January 2014. The Company has not novated its derivatives during the current period. However, these amendments would be considered for future novations.
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 may ultimately 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 derivative financial assets
Derivative financial assets comprise equity options and warrants over listed securities which include those received as non-cash consideration for advisory and other services. On grant, these instruments are fair valued by reference to a Monte Carlo simulation model. Inputs to the model include share price, risk-free rate of return and implied volatility. Although the underlying securities are listed, the equity options and warrants themselves are not. As a measure of implied volatility of the instrument is therefore not available, either the historic volatility of the underlying securities share price or that of a comparable company has been used as a proxy. The Directors consider that the initial valuation reflects fair consideration for the services provided.
c) Bad debt policy
The Company regularly reviews all outstanding balances and provides for amounts where there is significant doubt over the recoverability of the balance.
d) Provisions and contingent liabilities
Provisions are measured at the Directors' best estimate of the expenditure required to settle obligations.
3. Business and geographical segments
Following the disposal of its entire holding in CFM and CCIL, as disclosed in the Company's 2012 Annual Report, the Company has changed the way the business is assessed and performance reviewed; consequently, Cenkos has consolidated its reportable segments into one. This reflects the fact that Cenkos is managed as an integrated UK institutional stockbroking business and although it has different revenue streams, its activities are considered to be subject to similar economic characteristics. The internal reports used by the Chief Executive Officer for the purpose of monitoring performance and allocating resources reflect that Cenkos is managed as a single business unit.
An analysis of the Company's revenue and results by geographical location is as follows:
Geographical information	2013			2012
	United	Channel	Group	United	Channel	Group
	Kingdom	Islands	Total	Kingdom	Islands	Total
For the year ended 31 December	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Revenue from continuing operations	51,433	-	51,433	43,155	-	43,155
Revenue from discontinued operations	-	-	-	67	1,453	1,520
Revenue from continuing and discontinued	51,433	-	51,433	43,222	1,453	44,675
operations (a)
Non-current assets	1,411	-	1,411	822	-	822
(a) In 2013, revenues were generated entirely within the UK. In the prior year, they were attributed on the basis of the entity's location. Discontinued operations were located in both the United Kingdom and the Channel Islands.
Major clients
In the year to 31 December 2013, one of Cenkos' clients contributed more than 10% of Cenkos' total revenue. The amount was £6.43 million (2012: no one particular client's revenues accounted for more than 10% of the Company's total revenue).
4. Investment income - interest receivable
					2013	2012
					£ 000's	£ 000's
Interest income generated from:
Cash and cash equivalents					64	113
Held to maturity investments					-	19
Trade and other receivables					71	225
					135	357
Interest income generated from trade and other receivables includes the recognition of the unwinding of the discount factor applied to loans due from staff related to the issue of the partly paid B shares, which amounted to £71,221 (2012: £224,597).These loans were fair valued when granted and the discount factor unwound over the period until settlement. By 30 June 2013 all outstanding amounts in respect of the B shares had been received.
5. Interest expense
					2013	2012
					£ 000's	£ 000's
Interest on bank overdrafts and loans					1	6
6. Staff costs
	Continuing operations		Discontinued operations		Total
	2013	2012	2013	2012	2013	2012
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Staff costs comprise:
Wages and salaries	29,231	24,208	-	586	29,231	24,794
Social security costs	3,949	3,210	-	36	3,949	3,246
IFRS 2 share based payments	138	335	-	-	138	335
	33,318	27,753	-	622	33,318	28,375
The Company does not operate a pension scheme on behalf of its employees. It does, however, provide access to a Company designated stakeholder pension scheme.
The average number of employees (including executive Directors) was:
	Continuing operations		Discontinued operations		Total
	2013	2012	2013	2012	2013	2012
Corporate finance	20	18	-	-	20	18
Corporate broking	56	53	-	5	56	58
Administration	31	27	-	5	31	32
	107	98	-	10	107	108
					2013	2012
					£ 000's	£ 000's
The total emoluments of the highest paid Director serving during the year were:					1,840	677
7. Profit for the year
Profit for the year has been arrived at after charging / (crediting):
	Continuing operations		Discontinued operations		Total
	2013	2012	2013	2012	2013	2012
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Operating lease rentals	532	523	-	47	532	570
Auditor's remuneration (refer to analysis below)	160	153	-	23	160	176
Depreciation of property, plant and equipment	310	310	-	21	310	331
Staff costs (see note 6)	33,318	27,753	-	622	33,318	28,375
Change in fair value of financial assets designated as at FVTPL	(401)	(623)	-	-	(401)	(623)
					2013	2012
The analysis of auditor's remuneration is as follows:					£ 000's	£ 000's
Fees payable to the Company's auditor and their associates for the audit of the Company's annual accounts and consolidation					120	110
Total audit fees					120	110
Fees payable to the Company's auditor for other services to the Group:
- Half year review of the Company's interim statement					30	25
- Other advisory services - including taxation					10	18
Fees payable to other auditors for the half year review of the Company's subsidiaries					-	23
Total non-audit fees					40	66
					160	176
8. Tax
The tax charge comprises:					2013	2012
					£ 000's	£ 000's
Current tax
United Kingdom corporation tax at 23.25% (2012: 24.5%) based on the profit for the year					2,612	1,943
Adjustment in respect of prior period
United Kingdom corporation tax at 23.25% (2012: 24.5%)					25	87
Total current tax					2,637	2,030
Deferred Tax
Credit on account of temporary differences					(495)	(175)
Deferred tax prior year adjustment					(20)	-
Total deferred tax					(515)	(175)
Total tax on profit on ordinary activities from continuing operations					2,122	1,855
The tax expense in the income statement is disclosed as follows:
Income tax expense on continuing operations					2,122	1,855
Income tax expense on discontinued operations					-	5
					2,122	1,860
The tax charge for the year differs from that resulting from applying the standard rate of UK corporation tax of 23.25% (2012: 24.5%) to the profit before tax for the reasons set out in the following reconciliation.
					2013	2012
					£ 000's	£ 000's
Profit before tax from continuing operations					10,711	7,006
Profit before tax from discontinued operations					-	3,334
					10,711	10,340
Tax on profit on ordinary activities at the UK corporation tax rate of 23.25% (2012: 24.5%)					2,491	2,533
Tax effect of:
Permanent differences					104	211
Non-taxable gain on disposal of discontinued operations					-	(853)
Income not subject to corporation tax					(15)	(55)
Recognition of deferred tax on share-based payments previously unrecognised					(621)	-
Deferred tax rate change adjustment					148	-
Adjustment for loss relief not claimed					10	12
Adjustment in respect of prior period deferred tax					(20)	-
Adjustment in respect of prior period current tax					25	12
Tax expense for the year					2,122	1,860
In addition to the amount credited to the income statement, deferred tax relating to share-based payments amounting to £236,520 has been charged directly to equity (2012: £nil).
					2013	2012
Deferred tax recognised directly in equity					£ 000's	£ 000's
Arising on share-based payments					(237)	-
Total income tax recognised directly in equity					(237)	-
9. Discontinued operations
As disclosed and accounted for in the Company's 2012 Annual Report, on 1 February 2012 Cenkos disposed of its entire holding in CFM, which carried out all of the Cenkos' onshore fund management activity. Following a strategic review, Cenkos decided that CCIL was not core to Cenkos' business strategy and operations. On 2 April 2012 the Company completed the disposal of 80% of its 50% holding in CCIL, which carried out all of Cenkos' offshore wealth management and offshore stock broking activity, for a consideration of £4 million. This operation is based in the Channel Islands. The remaining 10% interest in the shares of CCIL was classified in the balance sheet as an available-for-sale financial asset. Thereafter, it was marked to market as the shares are quoted on the Channel Islands Stock Exchange. On 31 October 2012, Cenkos sold this remaining 10% interest in the shares of CCIL for £1.17 million. The results of the discontinued operations for the year ended 31 December 2012 were: revenue £1.52 million, administrative expenses £1.34 million, profit before tax £0.18 million, attributable tax expense £0.01 million and profit after tax including the gain on disposal of discontinued operations £3.33 million. For details of the results of the discontinued operations see note 9 of the Company's 2012 Annual Report.
10. Dividends
					2013	2012
Amounts recognised as distributions to equity holders in the period:					£ 000's	£ 000's
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2012 of 4p (December 2011: 1p) per share					2,430	709
Interim dividend for the period to 30 June 2013 of 3.5p (June 2012: 3.5p) per share					2,111	2,456
					4,541	3,165
A final dividend of 8.5 pence per share has been proposed for the year ended 31 December 2013 (2012: 4p). Under the CAP, the payment of a dividend to ordinary shareholders will trigger a cash payment to holders of options under the CAP. The payment of this final dividend will increase staff costs by £2.04 million in the first half of 2014 (4p final dividend re 2012 increased staff costs by £0.96 million in the first half of 2013).
11. Earnings per share
					2013	2012
Basic and diluted
From continuing operations					14.2p	7.4p
From discontinued operations					-	4.7p
From continuing and discontinuing operations					14.2p	12.1p
					2013	2012
The calculation of the basic and diluted earnings per share is based on the following data:					£ 000's	£ 000's
Earnings
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent					8,589	8,392
Number of shares					No.	No.
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share					60,525,904	69,341,308
The fall in the weighted average number of ordinary shares in 2013 is primarily due to the share buy-backs undertaken in November and December 2012.
The weighted average number of shares considered for the prior period also includes the total number of B shares, even though they were partly paid shares, as these shares were entitled to a full dividend pay-out.
The Board has agreed to continue to fund the Company's EBT so that it can make market purchases in Cenkos Securities plc shares as and when market conditions allow. During the year, 314,753 (2012: 1,259,974) ordinary shares were purchased for an aggregate consideration of £282,356 (2012: £755,150). As at 31 December 2013 the EBT held a total of 3,158,477 (2012: 2,843,724) ordinary shares at an aggregate consideration of £3.23 million (2012: £2.94 million). These shares are held by the trust in treasury and have been excluded from the weighted average number of shares calculation up to this date. The table below shows the number of shares held by the Company's EBT.
					2013	2012
Number of shares held by the Company's EBT					No.	No.
At 1 January					2,843,724	1,583,750
Acquired during the year					314,753	1,259,974
					3,158,477	2,843,724
					2013	2012
From continuing operations					£ 000's	£ 000's
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent					8,589	8,392
Adjustment to exclude parent share of discontinued operations:
Profit after tax from discontinued operations for the year					-	(3,329)
Profit attributable to non-controlling interests up to the point of disposal					-	88
Earnings from continuing operations for the purpose of basic and diluted earnings per share excluding discontinued operations					8,589	5,151
The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing and discontinued operations.
12. Events after the reporting period
There have been no events subsequent to the year-end which have had a material impact on the estimates and provisions made within these financial statements.
Additional Information
The financial information included in this statement does not constitute the Group's statutory accounts (within the meaning of section 434 of the Companies Act 2006) for the years ended 31 December 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 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.
The Annual General Meeting of Cenkos Securities plc will be held at 6.7.8. Tokenhouse Yard, London EC2R 7AS on 16 May 2014.

 

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