Replacement: Interim Results

RNS Number : 9332A

Cenkos Securities PLC

02 October 2020

 

Correction: this version replaces the version of 7am today and amends the wording in the Corporate Finance paragraph in the Performance section

2 October 2020

Cenkos Securities plc

Interim Results for the six months ended 30 June 2020

Cenkos Securities plc (the "Company" or "Cenkos" or the "Firm") today announces its results for the six months ended 30 June 2020. Cenkos is an independent, specialist institutional securities group, focused on small and mid-cap companies and investment funds. The Group's principal activity is institutional stockbroking.

Cenkos' shares are admitted to trading on the AIM Market of the London Stock Exchange ("LSE"). The Company is authorised and regulated by the Financial Conduct Authority ("FCA") and is a member of the LSE.

Highlights	30 June 20	30 June 19
Revenue	£12.9m	£10.6m
Underlying profit/loss *	£2.0m	£(0.1)m
Profit before tax	£0.8m	£(0.2)m
Profit after tax	£0.6m	£(0.2)m
Cash	£22.4m	£14.7m
Net assets	£24.6m	£26.0m
Basic earnings per share	1.1p	(0.6)p
Interim dividend per share	1.0p	2.0p

* Underlying profit is profit before restructuring costs and charges related to the Cenkos Short-Term Incentive Plan and tax. A reconciliation between Underlying profit before tax and Profit before tax is shown in the table below.

Since being admitted to trading on AIM in 2006, the Company has returned £114.6 million of cash to shareholders, equivalent to 177.3p per share, before the payment of the proposed 2020 interim dividend of 1.0p per share.

Commenting the Company's Chief Executive Officer, Jim Durkin said:

"Since the end of the period, we have completed several equity fundraisings for our clients. Although our current pipeline is encouraging and we continue to win new clients, we recognise that the prevalence of both the virus and measures taken to contain it, pose a continuing risk to the health of the economy and the financial markets. The restructuring programme started in 2019, has resulted in a significantly lower cost base going forward which, combined with the strength of Cenkos balance sheet and a rejuvenated strategic focus, means the Company is well placed to face the challenges ahead. The second half of the current financial year has begun with energy and purpose at Cenkos, despite the ongoing macro challenges presented by the ongoing coronavirus."

For further information contact:
Cenkos Securities plc
Jim Durkin - Chief Executive Officer		[phone]
Nominated Adviser Spark Advisory Partners Limited
Matthew Davis		[phone]
Public Relations Buchanan Communications
David Rydell		[phone]

Chief Executive Officer's statement

The clear outcome of the 2019 general election made for an encouraging start to 2020 with an increase in asset values and the level of corporate activity. Since then the Coronavirus ("COVID-19") and the resulting lock down have had an unprecedented impact on economies around the world. Our ongoing priority is the health and well-being of our staff and I am grateful for the efforts of our IT team, who ensured an immediate and seamless switch to remote working and our HR and Facilities team for their work to make our office COVID-secure, ready for our return. Swift action and our flexible operating model meant we have been fully operational throughout this time and therefore able to focus on our clients' needs and assist them through this period. Indeed, the second quarter of 2020 saw a further increase in corporate activity, such that secondary funds raised on AIM were more than double that raised in the first quarter.

Performance

Consequently, I am pleased to report that H1 2020 revenue increased by 21% to £12.9 million (H1 2019: £10.6 million) and underlying profit was £2.0 million (H1 2019: Loss £0.1 million).

A summary of H1 2020 performance compared to H1 2019 is set out in the table below:

	Six months ended	Six months ended
	30 June	30 June
	2020	2019
Revenue streams	£ 000's	£ 000's	% change
Corporate finance	9,216	6,245	48%
Nomad, broking and research	3,244	3,459	-6%
Execution - net trading gains	445	921	-52%
Revenue	12,905	10,625	21%
Staff costs	(7,392)	(6,368)	16%
Administrative expenses before restructuring costs and STIP	(3,539)	(4,336)	-18%
Underlying profit/(loss)	1,974	(79)	n/a
Restructuring costs and STIP	(1,158)	(172)	574%
Operating profit/(loss)	816	(251)	n/a
Investment income - interest income	23	65	-65%
Finance costs	(86)	(10)	763%
Profit/(loss) before tax	753	(196)	n/a
Tax	(163)	(5)	3160%
Profit/(loss) after tax	590	(201)	n/a

Corporate finance

Corporate finance fees increased by 48% to £9.2 million (H1 2019: £6.2 million). The level of corporate activity during this period has partly been due to companies raising funds to shore up their balance sheets to help them through the COVID-related economic down-turn. However, Cenkos' strategic focus on Growth Companies has seen our clients overwhelmingly raise funds for acquisitions and expansion to take advantage of new opportunities. Consequently, in raising funds for our clients, the average discount over H1 2020, between the placing price achieved by Cenkos and the clients' share price the previous day was 5.4%.

During H1 2020 we assisted our clients in raising £340 million (H1 2019: £343 million) of equity finance from 11 (H1 2019: 11) transactions. This included the largest IPO on AIM completed so far this year, one of only three completed in H1 2020.

Nomad, broking and research

Nomad, broking and research fees decreased by 6% to £3.2 million (H1 2019: £3.5 million) due to the net fall in the number of our clients from 100 at 31 December 2019 to 97 at 30 June 2020. Of the 11 clients no longer represented by Cenkos, 5 either delisted or were subject to a takeover. 8 new clients joined Cenkos in 2020 and we have so far completed transactions for 4 of them.

Execution

Net trading gains decreased by 52% to £0.4 million (H1 2019: £0.9 million). The Coronavirus and impact of the measures to contain it, led to a sizeable fall in markets worldwide. The FTSE AIM all share index declined by nearly 40% from 975.18 on 20 February 2020 to 589.90 by 19 March 2020 (Source: Google). Since then there has been a significant recovery in asset prices with the index climbing back to 883.75 by 30 June 2020. Despite the market conditions and the capital limits we apply to our trading books, we have traded profitably over the period, while making markets in 185 stocks and maintaining a top 3 market share in 80% of our client stocks.

Administrative expenses

Administrative expenses - staff costs

Staff costs increased by 16% to £7.4 million (H1 2019: £6.4 million) primarily due to an increase in the variable remuneration accrued in line with the increase in net revenue. This was partially offset by a reduction in salary costs resulting from the restructuring and reduction in staff numbers (see below).

Administrative expenses - other

Other administrative expenses decreased by 18% to £3.5 million (H1 2019: £4.3 million) due mainly to a fall in transaction costs and professional fees.

Administrative expenses - restructuring costs and Short-Term Incentive Plan ('STIP')

The restructuring programme started in 2019 was completed in H1 2020, resulting in a further reduction in staff numbers to a total headcount of 89 at 30 June 2020, from 95 at 31 December 2019. This restructuring has led to a charge in H1 2020 income statement of £0.7 million (H1 2019: £0.2 million) but an ongoing annualised saving in base staff costs of £0.8m. The measures we have taken to shape the business for the future meant Cenkos did not need to cut salaries, furlough staff or utilise any government allowances beyond the automatic deferral of one quarters payment of VAT, during the lockdown period.

The STIP was launched in April 2020 as a one-off plan to retain and incentivise key members of staff. The plan was funded using shares already held by the EBT, which will vest in equal tranches on the first and second anniversaries of its launch. The charge of £0.5 million (H1 2019: £nil) represents the portion of the fair value of the scheme allocated to this period.

Underlying profit before tax is disclosed before restructuring costs and costs associated with the STIP as the Directors' believe this provides a clearer view of the performance of the business.

Profit and earnings per share

Statutory profit before tax for the period was £0.8 million (H1 2019: loss £0.2 million). The tax charge for the period of £0.2 million equates to an effective tax rate of 22% (H1 2019: 3%). Profit after tax for the period was £0.6 million (H1 2019: Loss £0.2 million)

Basic earnings per share for the period was 1.1p (H1 2019: -0.6p)

Financial position

The statement of financial position discloses net assets of £24.6 million as at 30 June 2020 down from £26.0 million as at 30 June 2019, which largely reflects the cost of shares acquired by the EBT and dividends paid since then being partially offset by the H1 2020 profit generated.

The increase in Non-current assets relates to the recognition of a right-to-use asset on signing of new leases on our London offices during H2 2019. This has a corresponding impact on trade and other payables.

The reduction in net trading investments resulted mainly from the sale of shares received in lieu of fees ('SILOF').

The movements in trade and other receivables, trade and other payables and cash and cash equivalents relates to the sale of shares, the settlement of shares trades and profitable trading during the period.

	30 June	30 June
	2020	2019	Change
Net assets summary	£ 000's	£ 000's	£ 000's
Non-current assets	5,171	1,539	3,632
FVOCI financial assets	-	534	(534)
Other current financial assets	4,163	10,168	(6,005)
Other current financial liabilities	(681)	(4,157)	3,476
Net trading investments	3,482	6,545	(3,063)
Trade and other receivables	11,737	28,591	(16,854)
Trade and other payables - current	(12,818)	(25,210)	12,392
Trade and other payables - non current	(5,337)	(171)	(5,116)
Cash and cash equivalents	22,352	14,660	7,692
	24,587	25,954	(1,368)

Capital and Liquidity

The Board continuously assesses the Company's cash and capital requirements with the intention of maintaining a strong balance sheet, including a significant surplus over and above its Pillar 1, Individual Capital Guidance ('ICG') and Combined Capital Buffer ('CCB') requirements and sufficient liquid resources to cover at least 12 months of fixed overheads.

At 30 June 2020, Cenkos had a capital resources surplus of £15.8 million (H1 2019: £15.9 million) above its Pillar 1 regulatory capital requirement.

The Board

There have been several changes to the Board in 2020. Following Jeff Hewitt's retirement from the Board and his role as acting Chairman and Non-Executive Director on 28 February 2020, Jeremy Miller assumed the role as the acting Non-Executive Chairman on an interim basis. I am pleased to report that following our announcement in February of Lisa Gordon's appointment, her application was approved by the FCA on 10 June 2020 and she was formerly appointed as Chairman of the Board on 26 June 2020. In addition, following our announcement in November 2019 that Julian Morse, the head of our Growth Companies team, would join the Board as an Executive Director, his application was approved by the FCA on 27 April 2020 and he was formerly appointed a Director on 13 May 2020.

Assessment of Coronavirus impact

Since the start of lockdown, Cenkos has been fully operational and able to focus on our clients' needs. Consequently, we have been working with them to assess the impact of COVID-19 on their businesses and where appropriate assist them with their funding strategies, whether this be to strengthen balance sheets, invest in growth opportunities and/or complete acquisitions.

Our offices are COVID-secure, and we began a phased return, in line with Government guidance, earlier this month. Many of the new ways of working adopted over this period; however, will be carried forward to maximise our future operational efficiency.

Outlook

Since the end of the period, we have completed several equity fundraisings for our clients. Although our current pipeline is encouraging and we continue to win new clients, we recognise that the prevalence of both the virus and measures taken to contain it, pose a continuing risk to the health of the economy and the financial markets. The restructuring programme started in 2019, has resulted in a significantly lower cost base going forward which, combined with the strength of Cenkos balance sheet and a rejuvenated strategic focus, means the Company is well placed to face the challenges ahead. The second half of the current financial year has begun with energy and purpose at Cenkos, despite the ongoing macro challenges presented by the ongoing coronavirus.

Dividend

The Board proposes an interim dividend of 1.0p per share. The dividend will be paid on 20 November 2020 to all shareholders on the register at 23 October 2020.

Since being admitted to AIM we have returned £114.6m of cash to shareholders, equivalent to 177.3p per share, before the payment of the proposed 2020 interim dividend of 1.0p per share.

Responsibility statement

We confirm that to the best of our knowledge:

a)  The condensed set of 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 the undertakings included in the consolidation taken as a whole as at 30 June 2020; and

b)  The interim management report includes a fair review of the development and performance of the business and the position of Cenkos Securities plc with a description of the principal risks and uncertainties that the Company faces.

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 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.

Jim Durkin

Chief Executive Officer

1 October 2020

Condensed income statement

For the six months ended 30 June 2020

				Unaudited	Unaudited	Audited
				Six months ended	Six months ended	Year ended
				30 June	30 June	31 December
				2020	2019	2019
				£ 000's	£ 000's	£ 000's
Continuing operations
Revenue				12,905	10,625	25,916
Administrative expenses				(12,089)	(10,876)	(25,801)
Operating profit/(loss)				816	(251)	115
Investment income - interest income				23	65	106
Finance costs				(86)	(10)	(76)
Profit/(loss) before tax from continuing operations				753	(196)	145
Tax				(163)	(5)	(101)
Profit/(loss) after tax				590	(201)	44
Attributable to:
Equity holders of Cenkos Securities plc				590	(201)	44
Basic earnings per share				1.1p	(0.6)p	(0.2)p
Diluted earnings per share				n/a	n/a	n/a

Condensed statement of comprehensive income

For the six months ended 30 June 2020

				Unaudited	Unaudited	Audited
				Six months ended	Six months ended	Year ended
				30 June	30 June	31 December
				2020	2019	2019
				£ 000's	£ 000's	£ 000's
Profit/(loss)				590	(201)	44
Amounts that will not be recycled to income statement in future periods
Gain / (loss) on FVOCI financial asset				(36)	14	(46)
Tax on FVOCI financial asset				6	(3)	9
Other comprehensive gains / (losses)				(30)	11	(37)
Total comprehensive income/(expense)				560	(190)	7
Attributable to:
Equity holders of Cenkos Securities plc				560	(190)	7

Condensed statement of financial position

As at 30 June 2020

				Unaudited	Unaudited	Audited
				30 June	30 June	31 December
				2020	2019	2019
				£ 000's	£ 000's	£ 000's
Non-current assets
Property, plant and equipment				434	441	517
Right-of-use assets				4,299	502	4,540
Intangible asset				50	83	67
Deferred tax asset				387	512	486
Investments in subsidiary undertakings				1	1	1
				5,171	1,539	5,611
Current assets
Trade and other receivables				11,737	28,591	13,455
FVOCI financial assets				-	534	60
Other current financial assets				4,163	10,168	8,973
Cash and cash equivalents				22,352	14,660	18,333
				38,252	53,953	40,821
Total assets				43,423	55,492	46,432
Current liabilities
Trade and other payables				(12,818)	(25,210)	(14,715)
Other current financial liabilities				(681)	(4,157)	(1,840)
				(13,499)	(29,367)	(16,555)
Net current assets				24,753	24,587	24,266
Non-current liabilities
Trade and other payables				(5,337)	(171)	(5,219)
Total liabilities				(18,836)	(29,538)	(21,774)
Net assets				24,587	25,954	24,658
Equity
Share capital				567	567	567
Share premium				3,331	3,331	3,331
Capital redemption reserve				195	195	195
Own shares				(5,579)	(5,004)	(5,436)
FVOCI reserve				(171)	(82)	(141)
Retained earnings				26,244	26,947	26,142
Total equity				24,587	25,954	24,658

Condensed cash flow statement

For the six months ended 30 June 2020

				Unaudited	Unaudited	Audited
				Six months ended	Six months ended	Year ended
				30 June	30 June	31 December
				2020	2019	2019
				£ 000's	£ 000's	£ 000's
Profit/(loss)				590	(201)	44
Adjustments for:
Net finance income				64	(55)	(30)
Tax expense				163	5	101
Depreciation of property, plant and equipment, ROU assets and intangible asset				348	498	899
Fair value adjustment to deferred consideration				-	-	40
Shares and options received in lieu of fees				(120)	(374)	(3,987)
Share-based payment expense				945	736	1,115
Operating cash flows before movements in working capital				1,990	609	(1,818)
Decrease in net trading investments and FVOCI financial assets				3,795	692	3,598
(Increase) / decrease in trade and other receivables				1,756	(9,925)	5,212
(Decrease) in trade and other payables				(2,596)	(7,783)	(17,861)
Net cash flow from operating activities before interest and tax paid				4,945	(16,407)	(10,869)
Tax paid				-	(200)	(351)
Net cash flow from operating activities				4,945	(16,607)	(11,220)
Investing activities
Interest received				26	49	90
Purchase of property, plant and equipment				(7)	(7)	(197)
Acquisition of Nomad business				-	-	(140)
Net cash flow from investing activities				19	42	(247)
Financing activities
Lease incentive received				500	-	500
Lease payments made				(22)	(357)	(613)
Dividends paid				(515)	(1,398)	(2,485)
Proceeds from sale of own shares to employees on dividend reinvestment				-	23	40
Acquisition of own shares				(908)	(678)	(1,277)
Net cash used in financing activities				(945)	(2,410)	(3,835)
Net increase / (decrease) in cash and cash equivalents				4,019	(18,975)	(15,302)
Cash and cash equivalents at beginning of period				18,333	33,635	33,635
Cash and cash equivalents at end of period				22,352	14,660	18,333

Condensed statement of changes in equity

For the six months ended 30 June 2020

  Equity attributable to equity holders

	Share capital	Share premium	Capital redemption reserve	Own shares	FVOCI reserve	Retained earnings	Total
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
Balance at 1 January 2019	567	3,331	195	(5,663)	(93)	29,254	27,591
Loss	-	-	-	-	-	(201)	(201)
Loss on FVOCI financial assets net of tax	-	-	-	-	-	-	-
Gain on derecognition of FVOCI financial asset net of tax	-	-	-	-	11	-	11
Total comprehensive income	-	-	-	-	11	(201)	(190)
Issue of shares to employees on dividend reinvestment	-	-	-	36	-	(13)	23
Transfer of shares from share plans to employees	-	-	-	1,301	-	(1,301)	-
Acquisition of own shares	-	-	-	(678)	-	-	(678)
Credit to equity for equity-settled share-based payments	-	-	-	-	-	606	606
Current tax on share-based payments	-	-	-	-	-	-	-
Dividends paid	-	-	-	-	-	(1,398)	(1,398)
Balance at 30 June 2019	567	3,331	195	(5,004)	(82)	26,947	25,954
Profit	-	-	-	-	-	245	245
Loss on FVOCI financial assets net of tax	-	-	-	-	(37)	-	(37)
Gain on derecognition of FVOCI financial asset net of tax	-	-	-	-	(22)	11	(11)
Total comprehensive income	-	-	-	-	(59)	256	197
Issue of shares to employees on dividend reinvestment	-	-	-	29	-	(12)	17
Transfer of shares from share plans to employees	-	-	-	138	-	(138)	-
Acquisition of own shares	-	-	-	(599)	-	-	(599)
Credit to equity for equity-settled share-based payments	-	-	-	-	-	169	169
Current tax on share-based payments	-	-		-	-	7	7
Dividends paid	-	-	-	-	-	(1,087)	(1,087)
Balance at 31 December 2019	567	3,331	195	(5,436)	(141)	26,142	24,658

Balance at 01 January 2020	567	3,331	195	(5,436)	(141)	26,142	24,658
Profit	-	-	-	-	-	590	590
Loss on FVOCI financial assets net of tax	-	-	-	-	(30)	-	(30)
Total comprehensive income	-	-	-	-	(30)	590	560
Transfer of shares from share plans to employees	-	-	-	765	-	(765)	-
Acquisition of own shares	-	-	-	(908)	-	-	(908)
Credit to equity for equity-settled share-based payments	-	-	-	-	-	792	792
Dividends paid	-	-	-	-	-	(515)	(515)
Balance at 30 June 2020	567	3,331	195	(5,579)	(171)	26,244	24,587

Notes to the financial statements

1. Accounting policies

General information

The interim condensed financial statements of Cenkos Securities plc (the "Company" or "Cenkos") for the six months ended 30 June 2020 are unaudited and were approved by the Board of Directors for issue on 1 October 2020.

The Company is incorporated in England under the Companies Act 2006 (company registration No. 05210733) and its shares are publicly traded. The Company's principal activity is as an institutional stockbroker to UK small and mid- cap companies and investment funds. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates.

The preparation of financial statements in conformity with International Financial Reporting Standards ("IFRS") as adopted by the European Union requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.

Critical accounting policies and key sources of estimation uncertainty

The judgements and assumptions that are considered to be the most important to the portrayal of the Company's financial condition are those relating to equity-settled share-based payments, valuation of derivative financial assets, provisions and revenue recognition. These critical accounting policies and judgements are described on page 59 of the Cenkos Securities plc's 2019 Annual Report and Accounts.

These financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments.

Where appropriate prior year figures have been restated to conform to the current year presentation.

Basis of accounting

The interim condensed financial statements for the six months ended 30 June 2020 have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2019.

The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.

The financial information contained in these interim condensed financial statements does not constitute the Company's statutory accounts within the meaning of section 434 of the Companies Act 2006. The comparative information contained in this report for the year ended 31 December 2019 does not constitute the statutory accounts for that financial period. Those accounts have been reported on by the Company's auditors, at the time, Ernst & Young LLP and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Going Concern

The Group's business activities, together with the factors likely to affect its future development and performance, its principal risks and uncertainties, the financial position of the Group, its cash flows and liquidity position are set out in the Strategic Report in the Group's Annual Report for the year ended 31 December 2019.

In light of internal forecasts and the current pipeline of transactions, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, the Directors continue to adopt a going concern basis in preparing the interim financial statements.

Coronavirus ('COVID-19') was recognised as a pandemic by the World Health Organization (WHO) on 11 March 2020. In response, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes. These actions have severely restricted the level of economic activity around the world and impacted the health of the financial markets. Cenkos responded to COVID-19 promptly by enacting its business continuity plan and successfully implementing a comprehensive remote working capability. These procedures are working well and have enabled us to ensure both the wellbeing of our staff and the ability to continue servicing our clients.

Throughout this period and since the period end, Cenkos has completed a number of equity fundraisings for our clients, which could suggest a period of increased economic activity as our clients look to strengthen their balance sheets, invest in growth opportunities and/or complete acquisitions. Alternatively, although our current pipeline is encouraging and we continue to win new clients, we recognise that both the virus and the measures used to contain it pose a continuing risk to the health of the economy and the financial markets. This may dissuade companies from approaching the markets to raise further capital, leading to a period of inactivity. Whilst it is not possible to quantify the overall impact of COVID-19, as described above, if it were to lead to a period of inactivity this would most likely lead to a reduction in fees generated from placing and corporate finance and a decline in fair values of listed equities, options and warrants as observed in March 2020. Management continues to monitor the impact of the COVID-19 pandemic on the Company and the financial markets.

In order to mitigate the risk associated with fluctuations in the financial markets, the Company operates a flexible business model which links risk adjusted variable remuneration to corporate performance. Fixed costs are kept low and controlled and, in addition, the review of overheads conducted in 2019 has resulted in a significantly reduced fixed cost base going forward, so providing an even stronger foundation. Cenkos is not reliant on external borrowings but is funded entirely by share capital and retained earnings. The business is not capitally intensive. The trading book is tightly controlled by book limits and, apart from shares received in lieu of fees, is held for market making purposes or to facilitate client business. Cenkos has a positive cash cycle and does not run any liquidity mismatches. Cash is the largest asset on the statement of financial position and consequently its exposure to credit risk is largely due to its bank deposits before risk weighting.

Management has also performed an impact analysis as part of its going concern assessment using information available to the date of issue of these financial statements. As part of this analysis, a number of adverse scenarios have been modelled to assess the potential impact on the Company's revenue streams, in particular corporate finance fees, and on asset values, liquidity and capital adequacy. In addition, a reverse stress test has been modelled to assess the stresses the balance sheet has to endure before there is a breach of the relevant regulatory capital requirement or insufficient cash resources and including an assessment of any relevant mitigations management has within their control to implement. Having performed this analysis, management believes regulatory capital requirements continue to be met and the Company has sufficient liquidity to meet its liabilities for the next 12 months and that the preparation of the financial statements on a going concern basis remains appropriate as the Company expects to be able to meet its obligations as and when they fall due for the foreseeable future.

Changes in accounting policy

During H2 2019, the Company elected to voluntarily change its accounting policy for the Cenkos Securities Employee Benefit Trust ('EBT'), the Deferred Bonus Scheme EBT and the Share Incentive Plan ('SIP'); to treat it as an extension of the Company instead of as a separate subsidiary company. Consequently, the Company no longer has material subsidiaries as the remaining subsidiaries are all dormant companies, and, as a result, the Company is able to take advantage of the exemption under section 405 of the Companies Act 2006 and prepare separate financial statements for the Company only, rather than prepare both consolidated and parent company financial statements. This provides a clearer view of the financial performance and position of the Company for the users of the financial statements. This change has been adopted retrospectively and the impact of this change on the Company statement of financial position for the comparative period is to eliminate a balance receivable from the EBT and recognise the shares held by the EBT as own shares held, as shown in the table below:

						Restated		Restated
						30 June 2019		1 January 2019
						£ 000's		£ 000's
Current Assets: Trade and other receivables - Amounts owed by group undertakings							(5,004)	(4,181)
Equity: Own shares						5,004		4,181

The impact of this change on the Company cash flow statement is to include the own shares acquired by the EBT during the year under the caption 'Acquisition of own shares' and eliminate the increase in the balance receivable from the EBT from trade and other receivables.

Other new and amended standards

Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Company as they are either not relevant to the Company's activities or require accounting which is consistent with the Company's current accounting policies.

2. Dividends

				Six months ended	Six months ended	Year ended
				30 June	30 June	31 December
				2020	2019	2019
				£ 000's	£ 000's	£ 000's
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2019 of 1.0p (2018: 2.5p) per share				515	1,398	1,398
Interim dividend for the period to 30 June 2019 of 2.0p (2018: 2.0p) per share				-	-	1,087
				515	1,398	2,485
The proposed interim dividend for the period ended 30 June 2020 of 1.0p (30 June 2019: 2.0p) per share was approved by the Board on 1 October 2020 and has not been included as a liability as at 30 June 2020. The dividend will be payable on 20 November 2020 to all shareholders on the register at 23 October 2020.

3. Events after the reporting period

There were no material events to report on that occurred between 30 June 2020 and the date at which the Directors signed the Interim Report.

4.  Market abuse regulation (MAR) disclosure

Certain information contained in this announcement would have been deemed to be inside information for the purposes of article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

END

 

 

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