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2020
Cenkos Securities plc
Annual Report
About Cenkos
Cenkos Securities plc* is an independent, specialist institutional stockbroking company
We act as a nominated advisor, sponsor, broker and financial advisor to a range of companies and investment funds, at all stages
of their growth and across all sectors. We concentrate on companies that seek admission of their shares to trading on AIM or the
Main Market of the London Stock Exchange (“LSE”) and companies that are already quoted on those markets. We seek long-term
relationships with our clients throughout the various stages of their development. Our ethos is to focus on understanding our
clients’ financing needs to deliver good outcomes for them.
Cenkos’ shares were admitted to trading on AIM in 2006. The Company is authorised and regulated by the Financial Conduct
Authority (“FCA”) and is a member of the LSE. It has offices in London and Edinburgh.
* The “Company”, “Cenkos” or the “Firm”
Contents
Strategic Report
Our Services
Chairman’s statement
Chief Executive Officer’s statement
Strategic objectives
Our business model
Key performance indicators
Review of performance
Principal risks and uncertainties
Financial position
Stakeholder Engagement - Section 172 Statement
2020 ESG Progress Report
Governance
Governance policy and framework
Board of Directors
Nomination Committee report
Remuneration Committee report
Audit, Risk and Compliance Committee report
Statements of Directors’ responsibilities
Directors’ report
Independent Auditor’s report
Financial Statements
Income statement
Statement of comprehensive income
Statement of financial position
Cash flow statement
Statement of changes in equity
Notes to the financial statements
Other Information
Notice of Annual General Meeting
Explanatory notes to the notice of AGM
Information for shareholders
1
2
4
6
8
10
12
14
18
19
21
25
29
35
37
43
47
48
52
58
58
59
60
61
62
89
93
95
Continuing Operations
Revenue
2020
£31.9m
2019
£25.9m
Underlying profit *
2020
£4.0m
2019
£1.4m
Profit before tax
2020
£2.3m
Profit after tax
2020
£1.8m
Cash
2020
£32.7m
Net Assets
2020
£25.6m
2019
£0.1m
2019
£0.0m
2019
£18.3m
2019
£24.7m
Basic earnings per share
2020
3.7p
2019 (Restated) **
0.1p
Total dividend per share
2020
3.5p
2019
3.0p
* 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 on
page 12
** See note 10 for further details
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Governance
Financial
Our Services
transactions,
Corporate Finance
Cenkos focuses on investment funds, growth companies, large cap
corporate
traditional mineral and advanced
technology companies. The teams provide specialist technical
advice on all forms of corporate transactions including IPOs, fund
raisings, M&A, disposals, restructuring and tender offers. Our track
record in raising substantial equity capital for our clients is
underpinned by our wide and deep network of institutional
investors.
Revenue (CF Revenue)
2020
£22.3m
Funds raised
2020
£944m
Number of transactions
2020
29
2019
£17.4m
2019
£664m
2019
25
2019
3
Number of transactions of which are IPOs
2020
4
Nomad, Broking and Research
At the heart of our business is the depth of our relationship with our
retained corporate and investment fund clients. We act as the
intermediary between our clients, existing shareholders and
potential investors, with teams that have proven track records in
raising equity finance and other funding solutions. In addition to
transactional advice, Cenkos provides strategic advice, regulatory
guidance, assistance with investor relations and research.
Revenue (Retainer fees and commission)
2020
£6.2m
Number of clients
2020
94
Number of clients of which AIM listed
2019
£6.6m
2019
100
2020
70
Number of clients of which Main Market listed
2020
23
2019
21
2019
78
Execution Services
With access to multiple trading platforms, we are able to provide
liquidity and facilitate institutional business, making markets in both
small and large cap equities and investment funds. 2020 has seen a
decrease in stocks in which Cenkos makes a market which reflects
the Company’s risk appetite and the perceived risk in the market.
Revenue (Market making)
2020
£3.5m
Number of stocks we make markets in
2019
£2.0m
2020
197
2019
237
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Chairman’s statement
What a year 2020 turned out to be. Every sector of the economy and society as a whole, was faced with challenges most of us have
never seen in our lifetime. I joined the Board of Cenkos just as the COVID-19 pandemic struck and working with the Cenkos team to
manage the logistical challenges and meet our responsibilities to our clients, our employees and our shareholders, turned out to be
the most intense and effective induction exercise I could have asked for. It also enabled me to see first-hand the calibre of talent we
have at Cenkos and I would like to thank every person in the Company for their focus, professionalism, and the way they have
supported each other and our clients throughout the year. Our 2020 financial results are testament to our strong performance. In
total we completed 29 transactions during the year including four IPOs (FRP, Calnex, Round Hill and HeiQ), but I am particularly
encouraged by what can’t be so easily measured – the renewed sense of collaboration and purpose that is driving Cenkos forwards.
Board Changes
I want to take this opportunity to pay tribute to our Chief Executive, Jim Durkin, who announced his impending retirement in
December. Jim’s City career has spanned almost 40 years and since 2005 he has been central to the creation and development of
Cenkos. During the last few months, he has fulfilled one of the most challenging aspects of any CEO role, which is to manage
succession. The appointment of Julian Morse as Chief Executive Officer (subject to FCA approval) and the wider changes to the senior
management team, including the appointment of Jeremy Osler to the Board as Executive Director (also subject to FCA approval),
creates a strong management team to take the business forward. As at the time of signing this statement FCA approval has not yet
been received for these appointments. Jim will continue to remain in the CEO role in order to facilitate a smooth transition of
leadership through to the AGM when Jim will retire from the Company. On behalf of the Board, I want to thank Jim for his passion,
his support and his commitment to the Firm, as demonstrated by his return as CEO in 2019.
Strategy
In December 2020, the Board endorsed a Strategic Plan put forward by the incoming leadership team. The future strategy builds on
existing strengths. Cenkos has a strong track record in transactions – raising £0.9bn for our clients in 2020 – but our service offering
to clients is much broader than access to capital. At Cenkos we have a very high calibre team of Corporate Advisory specialists and
our strategy is focussed on building on our dual strengths in Corporate Finance and Broking, together with driving increased
collaboration across our sector specialisms. This ‘team of teams’ approach is reflected in the new operating structure that has been
put in place with leadership drawn from both sides of the business. Two taskforces have also been created to focus on Equity Capital
Markets and Business Development, to increase synergies and leverage our core strengths across the whole Firm. This synergistic
approach is reflected in a reformed Executive Committee (Exco) focused on firm-wide development as well as governance, and the
deployment of enhanced systems and processes to deliver increased performance and service levels.
Capital and Dividend
The Board conducted extensive stress testing of the Company’s capital structure in the early part of the year as we faced uncharted
territory with the pandemic. The Company has a strong balance sheet with cash resources of £32.7m as at 31 December 2020 and a
capital surplus over Pillar 1 requirements of £14.5m as at 31 December 2020. Our focus is to maintain strong liquidity and capital
position to mitigate the impact of swings in the financial markets, to fund growth and to distribute returns to shareholders by way of
dividends.
Culture and employee engagement
Over the past 12 months we have focused on developing the Cenkos culture. We have engaged with employees across the whole Firm
to understand how to drive the business forward – in terms of growth and conduct. The feedback on perceived strengths, weaknesses
and opportunities, has been key to our strategic planning as we go forward as a team. Maintaining strong governance, high standards
of conduct and an unwavering focus on client service, are fundamental to our culture and to successfully delivering our growth
strategy.
Communication is an essential feature of a successful culture and the increased use of video technology, forced upon us by remote
working, has enhanced our internal communications – and we are committed to maintaining this level of engagement in a post-
pandemic world. In the absence of face-to-face meetings, I have hosted weekly Chairman’s ‘virtual lunches’ throughout the year and
it has enabled me to get to know everyone from across the Firm, which has proved to be not only enjoyable, but of great business
benefit. I have seen the energy and passion that the Cenkos team has for their clients and for the firm itself, which is the reason I look
forward to the future with such confidence.
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Looking ahead
I have spent most of my career in Plcs and I passionately believe that the UK Capital Markets is the optimal environment for ambitious
companies - which represent our core client base. As a Plc Director myself, I understand the importance and value of having a trusted
adviser alongside you at every step of the capital markets journey. Cenkos has a real opportunity to grow market share by delivering
the most trusted and professional advisory and transactional services, to both corporates and investors in our core markets.
I believe the 2020 results represent the start of a new era for Cenkos, during which I expect to see the Firm grow strongly, in both size
and reputation. We may not be the biggest, but we are determined to be the best.
Lisa Gordon
Non-executive Chairman
19 March 2021
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Chief Executive Officer’s statement
2020 has been an extraordinary year like no other experienced in living memory. The pandemic and measures taken to contain it have
far reaching implications for all, impacting our daily lives and how we conduct our business. I am proud to report that the groundwork
laid over the past two years and the outstanding, combined efforts of our staff has enabled us, as a Firm, to react immediately and
concentrate our efforts on supporting our clients and assisting them to meet the challenges they face.
Strong performance in challenging times
After a brief pause, when the pandemic was announced, we have seen activity increase over the year as companies looked to the
equity markets for fast access to capital. During 2020, we raised £0.9bn (2019: £0.7bn) for our clients, completing 29 transactions
(2019: 25 transactions), predominantly to fund acquisitions or new growth opportunities. This included 4 IPOs (2019: 3) of which two
companies’ shares were admitted to trading on AIM and one company and an investment trust introduced to the main market.
Consequently, our revenue increased by 23% to £31.9m (2019: £25.9m) and underlying profit increased by 188% to £4.0m (2019:
£1.4m).
Since 2007, the number of companies listed on AIM has fallen. However, £5.76bn was raised on AIM in 2020, which was over 15%
higher than the average funds raised in the last 10 years, underpinning our belief that the Capital Markets provide the optimal platform
for ambitious companies seeking access to long term growth capital. Our Board-endorsed strategy focusses on entrepreneurial growth
companies and investment trusts. We believe these organisations and the positive macro trends towards equity markets are key, not
only to Cenkos’ future growth and success, but also to rebuilding our economy and providing employment as lockdown restrictions
are lifted.
Our goal has always been to develop deep, long term relationships with both our corporate and institutional clients. In this way, we
are best equipped to help them realise their funding strategies and, in our role as trusted adviser, support them in the development
of their business. Our employees are key to achieving this. I wish to personally thank them all, as it is their hard work and dedication
which enabled the Firm to react so quickly to the threat posed by COVID-19 and seamlessly switch to remote working, whilst
maintaining the high level of service provided to our clients.
In 2019 we launched our Culture project to increase employee engagement. Following on from this, our Chairman, Lisa Gordon, has
hosted ‘virtual lunches’, meeting with nearly all Cenkos’ staff to gain their input and feedback. This is driven by a genuine belief that
our future success is rooted in our shared vision for the Firm, its culture and strategy going forward.
Although our own Environmental Social and Governance (“ESG”) journey is ongoing, we always maintain the highest professional
and ethical standards. However, changes to the Board over the last two years have brought new energy and vigour to our
governance, highlighting the importance of environmental, social and governance issues. Whilst we recognise that remote working
does not come without its challenges, it has moved the Firm closer to paperless operation, cut employee commuter miles to a mere
fraction of their pre-COVID-19 levels and enabled many of our staff to work more flexibly. To build on this, the Cenkos ESG
committee was formed to drive forward and develop policies in line with responsible operation and, to assist our clients, in
conjunction with our ESG partner MJ Hudson, we hosted a virtual conference: “Taking AIM at ESG: Responsible behaviours that hit
the mark for public companies”.
The Board
During the year, 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 acting Non-Executive Chairman on an interim basis. Subsequent to the approval of
their applications by the FCA, Lisa Gordon was appointed Chairman of the Board on 25 June 2020 and Julian Morse, Head of the
Growth Companies Team was appointed Executive Director on 13 May 2020.
On 9 December 2020, I announced my intention to retire as Chief Executive. I am proud to have led the business over these past two
years and am pleased to hand over the reins to Julian Morse, subject to FCA approval, in line with our succession plan. Jeremy Osler,
Co-Head of Corporate Finance and Sponsor Services & General Counsel, will also be appointed an Executive Director on the Board,
subject to approval of his application by the FCA.
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Assessment of Coronavirus impact
The health and safety of our staff is our top priority and we are grateful to our IT team who ensured a seamless switch to remote
working. This has had a minimal impact on the Company’s cost base, but introduced and normalised new ways in which we conduct
business. Even after the lockdown is lifted, we expect the use of these technologies to continue and to adapt, accordingly, the
configuration of our office space.
As reported above, our strong performance in 2020 has been driven by the increase in market activity as companies looked to raise
much needed capital, since the announcement of the pandemic. We will continue to maintain our strategic focus on growth
companies and investment trusts as we believe it is these agile and entrepreneurial organisations which will lead the charge to rebuild
the economy and provide employment as we emerge from the pandemic. 2020 has reinforced our already healthy cash and capital
positions. Combined with our significantly reduced cost base, we are well placed to meet the challenges and opportunities ahead.
Outlook
The strength of UK equities during 2020, and in particular the AIM market, has shown the opportunity for ambitious companies to
raise the money to fund their growth through the London capital markets. Last year the AIM index was up 21%, significantly
outperforming the FTSE All Share index. Over the same period the average Cenkos deal increased shareholder value by significantly
more, underlining our position as the Partner for Success with corporate and institutional clients. We are delighted to work with
almost 100 corporate clients – companies which demonstrate growth, ambition and innovation – and the 2021 business pipeline is
healthy. As a result, we are well placed to grow our franchise.
Cenkos is evolving. The leadership team is focused on providing first-class service, conduct and collaboration, and taking a long-term
view of client relationships by maintaining effective corporate advisory support and execution in the aftermarket and secondary
market. Our objective over the next two to three years is to continue to build on our strengths and synergies to deliver sustainable
and predictable earnings and a stronger platform for growth.
I will be passing the CEO baton to Julian with confidence.
Dividend
The Board is confident in the Group’s strong capital position and encouraged by the strategic direction it is heading in and is pleased
to announce an 2.5p final dividend which brings the full year dividend to 3.5p a share. Since being admitted to AIM we have
returned £115.1m of cash to shareholders, equivalent to 178.3p per share, before the payment of the proposed 2020 final dividend
of 2.5p per share.
Jim Durkin
Chief Executive Officer
19 March 2021
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Strategic report
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Strategic report
About this report
In accordance with Section 414A of the Companies Act 2006, the Directors are pleased to present their Strategic report on the
development and performance of the Company during the year ended 31 December 2020, the financial position of the Company as
at 31 December 2020 and the principal risks to which the Company is exposed.
This report is a key part of the Annual Report and Accounts and provides an opportunity for the Directors to communicate our
objectives and strategy (Strategic objectives), the measures we used to determine how well the Firm is performing (Key performance
indicators) and the key enterprise-wide risks (Principal risks) faced by the Firm which could prevent these goals from being achieved.
We also provide an overview of how the Firm is structured (Our Business Model) and a review of the Company’s performance for the
year ended 31 December 2020 (Review of performance) in order to add context to the results presented in the financial statements.
Finally, we summarise the Firm’s financial position (Financial Position) and have commented upon the future prospects for the Firm
(Chief Executive Officer’s statement).
Strategic objectives
Our goal is to help our clients to realise the funding strategies that will assist their businesses develop and therefore meet their
shareholder expectations.
We have invested is sector expertise, so we fully understand our corporate clients’ businesses enabling us to provide the correct
advice and to target the right long-term investors for them to partner with. We were no.1 fundraiser for Medical Devices on AIM and
no.2 fundraiser for Investment Trusts on the LSE. We pride ourselves in fair pricing aiming to raise money for our corporate clients at
the market price or at a tight discount and following through with very effective aftermarket support. This has led to an average
increase of 42% in the share price of our client’s deals in 2020.
To properly access the talent across the firm, Equity Capital Market (‘ECM’) and Business Development task forces has been set up
which will ensure greater efficiency and an extra driver for revenue generation.
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Governance
Financial
Progress
Outlook
Strategic Objective
1
Grow the revenue base by
consistent,
a
providing
focused
market-leading
service in order to retain
existing clients and winning
new ones
Strategic Objective
2
Strong team culture aimed
at attracting and
developing talent
Number of clients
94
at 31 December 2020, compared to
100 in 2019
During 2020 Cenkos won 18 new
clients
Funds Raised
£0.94bn
at 31 December 2020, compared to
£0.66bn in 2019
Average number of staff
91
during 2020, compared to 111 in
2019
Revenue per head
£0.4m
at 31 December 2020, compared to
£0.2m in 2019
◼ A strong ethos of client trust.
◼ Growth in revenue and the client base will
depend upon the health of the financial
markets and investor sentiment. In 2021,
this will be reliant on the success of
Government policy to stimulate the
economy and navigating a route out of
lockdown.
◼ Culture conducive to the support and
continuous development of staff.
◼ Collaborative environment across firm to
leverage the talents of employees and
ensure good outcomes for our clients.
Strategic Objective
Disciplined approach to
operational efficiency
3
Administrative expenses to
revenue
92%
in 31 December 2020, compared to
100% in 2019
◼ Restructuring program completed in 2020
anticipated to yield savings of £3m
compared to 2019.
◼ Keep fixed costs low to mitigate the impact
of swings in the financial markets.
Strategic Objective
4
Use our strong balance
sheet and capital position
to grow the business
Cash
£32.7m
at 31 December 2020, compared to
£18.3m in 2019
Solvency ratio
266%
at 31 December 2020, compared to
226% in 2019.
◼ The Company has a strong balance sheet
with cash resources of £32.7m as at 31
December 2020 (2019: £18.3m).
◼ Maintain strong liquidity and capital
position in excess of its regulatory
requirements to mitigate the impact of
swings in the financial markets.
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Financial
Our business model
We have an integrated business model that, subject to regulatory and legal
requirements, allows the combined expertise within the Firm to work together for
the benefit of our clients.
Clients
As an Institutional equity broker our clients are two fold, being both our corporate clients and our institutional fund management
clients. The interests of both sets of clients lies at the heart of what we do.
Our corporate clients are some of the most exciting and ambitious companies listed on the UK market. By their nature the relationship
they have with their institutional shareholders is crucial to their capital markets strategy and therefore their ultimate success. What
we aim to do is provide the very best possible advice to our corporate clients which enables them to execute their strategy in the
optimum way. The relationships with our corporate clients can be very enduring. Approximately half of our clients have been with
Cenkos for over 5 years and some significantly longer. When we are appointed to advise a company we think in terms of years which
we believe allows us to align our thinking with that of our clients.
We maintain regular contact with our clients both corporate and institutional which include verbal and electronic communications,
face to face meetings, site visits and conferences. Maintaining an efficient exchange of information is a vital part of what we do.
The relationship we have with our institutional fund management clients is strong and is built on the quality of the portfolio of
corporate clients that we act for and on the quality of our institutional sales, research, execution and Investor relations functions.
What this means in practice is that we understand what sort of investment opportunities our institutional clients are looking for, both
in terms of sector and size and where they may fit in their investment strategy.
Our Strategic objectives are outlined in more detail on pages 6 and 7.
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Financial
People, culture and conduct
Cenkos is a collection of highly intelligent and talented people. We recruit based on ability and reward on merit irrespective of race,
age or gender. Because of the nature of our business model our people are some of the most highly experienced in the UK market.
The average age of employee across the firm is 43 and over half of front office staff have been with Cenkos for over 5 years, which
provides continuity for our clients and a strong team ethos within the organisation. The wealth and depth of knowledge of capital
markets is what makes Cenkos unique amongst its peers.
We seek to maintain the highest standards of business conduct to ensure good outcomes for our clients and thereby help safeguard
our reputation for the long term. To achieve this, we provide our people with the support to develop through Continuous Professional
Development programmes supported by the Chartered Institute for Securities and Investment, other relevant professional and
educational bodies and through ongoing support from legal and other professional service providers.
We firmly believe the long-term success of our business is aligned to the long-term success of our client base, thereby involving the
collaborative effort and talents of all our staff, building trusted professional relationships by acting with honesty, fairness, reliability
and competence.
We strive to remunerate our people within a framework that incorporates basic and performance-related pay, and that motivates
them to perform in line with Cenkos’ strategic objectives and in the context of their role within the Firm.
Details of governance arrangements and associated risk management processes are outlined in more detail in the Governance report
and, for financial risks, in note 24 of the financial statements.
Our business model
Our business is reliant on the health of the financial markets and investor sentiment, which in turn are impacted by macro-economic
factors and geo-political events. The swings of the financial markets can lead to a certain amount of volatility in performance year-on-
year as much of our revenue is generated from corporate finance transactions, the commissions on which are usually large and
irregular by nature. To mitigate this, we operate an efficient and flexible business model specifically designed to allow for volatility by
keeping fixed costs low and controlled, while focusing on growing our client base. Our remuneration policy reflects the business
model, aiming to align remuneration with the long-term success of Cenkos by retaining the principle of “performance-related pay”.
The main revenue streams are described below:
1 Corporate finance
Commission is earned on primary and secondary capital raising, where Cenkos will bring together our clients requiring capital
with those investors willing to provide capital and fees earned in relation to corporate finance advisory work, generally in
connection with corporate actions, mergers and acquisitions, disposals, restructuring and tender offers. The revenue is generally
dependent upon the size and complexity of the transaction.
2 Nomad, Broking and Research
Annual retainer fees are received for acting as Nomad, broker and/or financial advisor, generated from our corporate and
investment trust clients.
3
Execution
Gains or losses are made from positions in shares we hold as market maker or where we receive shares in lieu of fees. The role
of a market maker is mainly that of providing liquidity to other market participants to ensure there is an active market in the
relevant share. With access to multiple trading platforms and liquidity providers, our market makers provide skill and human
effort that, we believe, cannot be found in either dark pools or standalone electronic trading venues.
Client-facing staff are underpinned by a Support Services team and selective outsourcing arrangements that provide high levels of
resilience and expertise and could support far higher revenues with very little additional cost. Our core trading and settlement systems
are outsourced to Fidessa and Pershing respectively.
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Key performance indicators
Revenue per head
Corporate client base
£0.48m
£0.41m
£0.37m
£0.35m
£0.23m
2016
2017
2018
2019
2020
The total revenue expressed as a
ratio to the total (full time
equivalent) number of employees
Link to strategic objective
1. Grow revenues by retaining
existing clients and winning new
ones.
2. Strong team culture aimed at
attracting and developing talent.
4. Use our strong balance sheet
and capital position to grow the
business.
116
117
116
100
94
2016
2017
2018
2019
2020
The total number of retained
clients.
Link to strategic objective
1. Grow revenues by retaining
existing clients and winning new
ones.
2. Strong team culture aimed at
attracting and developing talent.
FY20 Progress
◼
Increase in transactional activity
looked to the
as companies
equity markets for fast access to
capital.
◼ Client base down on last year
due to the rotation of several
clients,
and
acquisition.
delisting
Key Risks
◼ The route out of COVID-19
the
lockdown, success of
vaccines and UK Government’
devolved
and
the
administrations’ policies
to
stimulate the economy will
the
determine whether
market
remain
favourable.
conditions
FY20 Progress
◼ Putting our corporate and
investment trust clients at the
core of what we do is a key
factor in determining the long-
term success of the business.
◼ Client base down on last year
due to the rotation of several
clients,
and
acquisition.
delisting
Key Risks
◼ Client
departures
may
continue to occur through
M&A and other routes (for
example, as
their boards
require advisors to rotate
away).
Funds raised for clients
Non-corporate finance revenue to fixed costs
£2,533m
£1,325m
£1,193m
2018
2017
2016
Total funds raised.
£944m
£664m
2019
2020
FY20 Progress
◼ A track record in raising funds
on AIM with 8% of all raisings in
2020 (2019: 8%). In addition, we
have built up expertise and a
clear track record
in taking
the LSE’s Main
to
clients
Market.
Link to strategic objective
1. Grow revenues by retaining
existing clients and winning new
ones.
2. Strong team culture aimed at
attracting and developing talent.
Key Risks
◼ The route out of COVID-19
lockdown, success of
the
vaccines and UK Government’
devolved
and
the
administrations’ policies
to
stimulate the economy will
the
determine whether
market
remain
favourable.
conditions
the
◼ Regulatory change continues
supervisory
with
imperatives set forth by the
FCA, ongoing changes as a
result of the UK’s withdrawal
from the EU and the continued
focus on sustainability issues
could render certain areas of
business uneconomic.
◼ Client
may
departures
continue to occur through
M&A and other routes (for
example, as
their boards
require advisors to rotate
away).
66%
63%
57%
50%
41%
2016
2017
2018
2019
2020
Link to strategic objective
1. Grow revenues by retaining
existing clients and winning new
ones.
3. Disciplined approach
operational efficiency
to
FY20 Progress
◼ We operate an efficient and
business model
flexible
specifically
to
mitigate against the volatility
in the financial markets.
designed
◼ The restructuring programme,
completed in 2020, yielded
over a £3m reduction in the
2020 fixed cost base when
compared to 2019.
◼ 2020 has
reinforced our
already healthy cash and
capital positions. Combined
with our significantly reduced
cost base, we are well placed
to meet the challenges and
opportunities ahead.
Key Risks
◼ The route out of COVID-19
lockdown, success of
the
vaccines and UK Government’
and
devolved
administrations’ policies to
stimulate the economy will
the
determine whether
market
remain
favourable.
conditions
the
the
◼ Regulatory change continues
supervisory
with
imperatives set forth by the
FCA, ongoing changes as a
result of the UK’s withdrawal
the
EU
the
from
continued
on
could
sustainability
render
areas of
business uneconomic.
focus
issues
certain
and
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Governance
Financial
Cash at Bank
Regulatory surplus over Pillar 1 capital requirements
£36.8m
£33.6m
£32.7m
£23.8m
£18.3m
Link to strategic objective
4. Use our strong balance sheet
and capital position to grow the
business.
£9.8m £9.6m
£11.2m
£13.5m £14.5m
2016
2017
2018
2019
2020
2020
2017
2019
2018
2016
Capital surplus over Pillar 1
capital requirements at 31
December.
and
FY20 Progress
◼ 2020 has reinforced our already
capital
healthy
cash
positions. Combined with our
significantly reduced cost base,
we are well placed to meet the
challenges and opportunities
ahead.
Key Risks
◼ The route out of COVID-19
the
lockdown, success of
vaccines and UK Government’
devolved
and
the
administrations’ policies
to
stimulate the economy will
the
determine whether
market
remain
favourable.
conditions
FY20 Progress
◼ Regulatory surplus remains
solid, calculated using the
methods prescribed in CRD IV.
Underlying profit
£10.7m
£5.0m
£4.6m
£4.0m
£1.4m
2016
2017
2018
2019
2020
FY20 Progress
◼ Underlying profit
2020’s performance.
reflecting
Dividend per share
9.0p
6.0p
4.5p
3.0p
3.5p
2016
2017
2018
2019
2020
FY20 Progress
◼ Dividend per share reflecting
2020’s performance and the
the business
strength of
model.
Link to strategic objective
1. Grow revenues base by
retaining existing clients and
winning new ones.
2. Strong team culture aimed at
attracting and developing talent.
Key Risks
◼ The route out of COVID-19
lockdown, success of
the
vaccines and UK Government’
devolved
and
the
administrations’ policies
to
stimulate the economy will
the
determine whether
remain
market
favourable.
conditions
approach
Link to strategic objective
3. Disciplined
operational efficiency.
4. Use our strong balance sheet
and capital position to grow the
business.
to
Key Risks
◼ The route out of COVID-19
the
lockdown, success of
vaccines and UK Government’
and
devolved
administrations’ policies to
stimulate the economy will
the
determine whether
market
remain
favourable.
conditions
the
◼ From
January 2022,
surplus will
under
the
be
capital
calculated
IFPR.
Although exact details of the
new calculations have not yet
been published, we are
significant
our
confident
capital resources and the
transition period will mean we
to
will
be
comfortably
capitally
adequate.
continue
Link to strategic objective
1. Grow revenues base by
retaining existing clients and
winning new ones.
4. Use our strong balance sheet
and capital position to grow the
business.
Key Risks
◼ The
sustainability of
the
dividend per share will be
dependent upon performance
and subject to the Board’s
provide
intention
to
distribution
the
business cycle.
across
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Governance
Financial
Review of performance
Revenue
I am pleased to report that our full year 2020 revenue increased by 23% to £31.9m (2019: £25.9m) reflecting the significant increase
in corporate activity experienced during the year across both AIM and the Main market and an increase in asset prices at the end of
the year on news of a trade agreement between the UK and EU. Total funds raised by companies on the Main Market increased by
120% to £37.4bn (2019: £17.0bn), while total funds raised by AIM Companies increased by 50% to £5.8bn (2019: £3.8bn) (Source: LSE
AIM & Main Market factsheets December 2020).
A summary of the revenue streams from the Company’s business activities is set out in the income statement below:
Revenue streams
Corporate finance
Nomad, broking and research
Execution - net trading gains
Revenue
Staff costs excluding restructuring costs and STIP
Administrative expenses before restructuring and STIP
Underlying profit/(loss)
Restructuring costs and STIP *
Operating profit/(loss)
Investment income - interest income
Finance costs
Profit/(loss) before tax
Tax
Profit/(loss) after tax
2020
£ 000's
22,250
6,175
3,488
31,913
(21,304)
(6,585)
4,024
(1,625)
2,399
30
(176)
2,253
(449)
1,804
2019
£ 000's
17,364
6,582
1,970
25,916
(15,805)
(8,715)
1,396
(1,281)
115
106
(76)
145
(101)
44
% change
28%
-6%
77%
23%
35%
-24%
188%
27%
1986%
-72%
132%
1454%
345%
4000%
* Restructuring costs and STIP includes legal fees associated with redundancy.
Business activities
Corporate finance
Corporate finance revenue increased by 28% to £22.5m (2019: £17.4m). This was generated from the completion of 29 placing
transactions (2019: 25) including 4 IPOs (2019: 3). We raised £0.9bn (2019: £0.7bn) for our clients, of which £0.4bn (2019: £0.3bn)
was raised on AIM. This is equivalent to 8% (2019: 8%) of all funds raised on AIM in 2020.
Notable deals completed during the year include the IPOs for FRP Advisory Group plc raising £80m, Calnex Solutions plc raising £22.5m,
Round Hill Music Fund raising US$282m and HeiQ Materials Company Limited raising £60m and the placings for Marlowe plc raising
£70m and Venture Life Group plc raising £36m.
Nomad, broking and research
Nomad, broking & research fees decreased by 6% to £6.2m (2019: £6.6m). This is partly due to a reduction in the size of our client
base to 94 companies and investment trusts (2019: 100), a significant portion of which was due to companies delisting. There was
also a fall in research fees and commission income following cuts in Institutional research budgets and secondary trading volumes.
According to the Corporate Advisers Rankings Guide, Cenkos is ranked 2nd by number of AIM clients and 5th by their aggregate market
capitalisation.
Execution services
Execution services delivered net trading gains of £3.5m in 2020 (2019: £2.0m). This 77% increase was achieved against a backdrop of
extremely difficult and volatile markets, while limiting the use of capital, but still maintaining a top 3 market share in 84% (2019: 82%)
of our client’s stocks. The year ended on a positive note as asset prices increased on news of the agreement of a trade deal between
the UK and EU. Overall Cenkos makes markets in 197 (2019: 237) stocks of which 58 (2019: 91) are listed on the Main Market of LSE.
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Governance
Financial
Administrative expenses
Staff costs excluding restructuring costs and STIP
Staff costs increased by 35% to £21.3m (2019: £15.8m). This was due to an increase in the variable remuneration accrued for staff in
line with the overall improvement in Cenkos’ performance, which was partially offset by the reduction in salary costs resulting from
the reduction in staff numbers. As a result of the restructuring programme, average headcount decreased to 91 (2019: 111) and the
total number of staff employed at the year-end decreased to 87 (2019: 95).
Administrative expenses before restructuring and STIP
Administrative expenses before restructuring and Short-Term Incentive Plan (‘STIP’) costs for the year decreased by 24% to £6.6m
(2019: £8.7m). This was due to a decrease in transactions costs and data costs which reflect a corresponding reduction in volumes
and staff headcount respectively as well as reduction in professional fees in part arising from the audit tender.
Restructuring costs and STIP
The significant decrease in average headcount resulting from restructuring programme completed in H1 2020 led to a charge to the
income statement of £0.7m (2019: £1.3m) and yielded an ongoing annualised saving in base staff costs of £0.8m.
As a result of this action, taken to shape the business for the future, Cenkos has not had to reduce salaries, furlough staff or utilise
any government allowances beyond the automatic deferral of one quarter’s 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 Cenkos’ Employee Benefit Trust (‘EBT’), which will vest in equal tranches on the first and second anniversaries of
its launch. The charge of £0.9m (2019: £nil) represents the portion of the fair value of the scheme allocated to this year.
Profit and earnings per share
Underlying profit before tax increased by 188% to £4.0m (2019: £1.4m). This alternative performance measure is disclosed before
restructuring costs and costs associated with the STIP as the Directors’ believe it provides a clearer view of the performance of the
business.
Profit before tax from continuing operations increased to £2.3m (2019: £0.1m). The tax charge for the year of £0.4m (2019: £0.1m)
equates to an effective tax rate of 20% (2019: 70%) on continuing operations. Profit after tax on continuing operations increased to
£1.8m (2019: £0.0m).
Basic earnings per share from continuing operations increased to 3.7p (2019: 0.1p).
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Governance
Financial
Principal Risks and Uncertainties
The Board is responsible for determining the Company’s risk appetite and ensuring
that the risk management framework is appropriate and operating effectively.
An awareness and appreciation of risk are built into our culture where employees are encouraged to take responsibility for ensuring
that the identification and management of risk, be it reputational, operational, conduct, or other risks specific to their own business
area, are integrated into their own working practices and thereby ensuring a robust governance framework from the bottom up as
well as from the top down.
The day-to-day management of risk has been delegated by the Board to the senior executives across the Firm overseen by the Audit,
Risk and Compliance Committee (ARCC) and underpinned by robust systems and controls proportionate with the Firm’s risk appetite
and governance arrangements.
Cenkos prides itself on its entrepreneurial and commercial approach, focussed on generating value and the best outcomes for its
clients. However, the Board recognises that this must be balanced with a culture that seeks to ensure that all significant and relevant
risk exposures are identified and appropriately managed and that mitigation strategies employed are effective.
The Governance policy and framework section (page 25 onwards) describes how the Board receives input from other key governance
committees along with the framework employed by the Company to manage the risks faced in the normal course of business.
In financial terms, the Board’s policy aim is to hold sufficient regulatory capital that, at a minimum, it will meet its own interpretation
of the most severe but plausible stress test measures and, thereby, maintaining an additional capital buffer available for use should
adverse circumstances arise outside the Firm’s normal and direct control.
The global pandemic of COVID-19, which the World Health Organisation declared as a Public Health Emergency of International
Concern in March 2020, has had a significant impact on the global economy and the health of financial markets. Unprecedented global
lockdowns to stem the spread of the virus has materially impacted financial stability with production and manufacturing together
with many other industries halting activity. The UK commenced its vaccination programme on 8 December 2020 with a commitment
that by 15 February 2021 a first vaccine dose will have been offered to everyone in the top four priority groups identified by the Joint
Committee on Vaccination and Immunisation. The most recent data published by the UK Government suggests that this target has
been achieved and together with the other metrics indicate the UK is now past the peak of the second wave of the virus. However,
we would note that there is still a long way to go before any ‘normality’ resumes and possibly longer still before the economy is able
to start its recovery in earnest. Accordingly, the principal risks to which the Company is exposed are set out in the table below against
the backdrop of the current economic climate as a result of COVID-19 and Brexit. Although not exhaustive, this highlights the risks
that are currently considered to be of most significance to the Company’s activities and which could affect the ongoing financial health
of the Firm.
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Governance
Financial
Description
Impact of COVID-19
How the risk is mitigated
People
Notwithstanding the measures
introduced by the UK Government
to contain the virus and the
vaccination programme currently
being rolled out, there remains a
risk that our people may contract
the virus. Subject to the number of
concurrent cases and the different
business areas affected, there is a
risk of short-term interruptions or
delays to operations.
At Cenkos the health and
well-being of our employees
is of fundamental
importance as they are
central to our success in
delivering high quality
service and advice to our
clients and are a critical
factor in determining the
long-term success of the
business. Attracting,
developing and retaining
talent is essential to
maintain the Company’s
competitive advantage.
Health of
financial
markets and
investor
sentiment
Our income is heavily
dependent upon the health
of the financial markets and
in particular the economic
conditions of the UK and
how they impact the equity
capital markets.
COVID-19 and the measures
brought in to contain it, led to a
significant fall in asset prices and
disruption to the market in March
2020. Subsequently, there was an
increase in transactional activity as
our corporate clients looked to
gain access to much needed
capital. During this period investor
sentiment remained favourable.
The route out of lock down,
success of the vaccines and UK
Government’ and the devolved
administrations’ policies to
stimulate the economy will
determine whether the market
conditions remain favourable.
Reputational One of the most significant
risks the Company faces is
the damage to our
reputation and the potential
impact that may have on
relationships with our
stakeholders including our
clients and shareholders and
the future performance of
the business.
Reputational risk can arise
from financial, operational,
COVID-19 brings into focus, in a
way never seen previously, the
Company’s operational resilience
and, in particular, its ability to
react and continue to provide
services to all of our institutional
and corporate clients, whether we
are operating from our office
premises or through colleagues
working remotely. Any perceived
‘struggle’ - whether operational,
financial or regulatory - would
quite quickly impact the
The retention, professional
development and growth of our
people remains at the top of the
Board’s agenda.
We seek to minimise people risk
by creating the right culture and
working environment to drive the
best outcomes for clients and by
positively rewarding our people
with a competitive total
remuneration package. Cenkos
commenced a company-wide
culture survey to drive employee
engagement towards the end of
2019 and our Chairman, Lisa
Gordon has engaged directly with
staff to understand their views
and discuss their concerns in this
regard.
Senior management succession
planning is overseen by the
Nomination Committee, the result
of which have been the changes to
the Board, subject to FCA
approval, announced on 9
December 2020.
Our business continuity plans have
evolved during lockdown to
ensure our ongoing operational
resilience providing long-term
support to employees working
remotely, including the provision
of IT solutions and equipment to
ensure they can operate
effectively from home.
Throughout this year, Cenkos has
demonstrated success in raising
capital for its corporate clients
regardless of whether colleagues
have been able to work in the
office when the restrictions were
eased or remotely. The Company’s
financial performance has further
enhanced its cash and capital
position, while the restructuring
programme started in 2019
significantly reduced its cost base.
This, combined with the
Company’s strong institutional
relationships and its flexible
business model, mean it is well-
placed to withstand financial
turmoil.
The Board sets the Company’s
cultural tone by requiring a strong
ethical and professional culture.
The appointment of Lisa Gordon
was testament to the Board’s
continued focus on good
corporate governance and its
commitment to diversifying its
cognitive thought.
All new business is subject to
rigorous multi-tier and multi-
disciplinary committees each of
Change in the year and trend in
residual risk
Staff retention, other than in
those areas subject to the period
of consultation, has been high.
The improvement in the Firm’s
financial performance in 2020 has
meant an increase in variable
remuneration payments to staff.
Share incentive schemes
commenced again in 2020 and
will be implemented in 2021.
No change in residual risk after
mitigating actions.
No Change
Although 2020 saw an increase in
market activity, the deliberate
omission of financial services
from the UK EU Trade and
Cooperation Agreement has
meant that uncertainty still
remains as regards the long-term
relationship between the UK and
EU and the further impact of
COVID-19 both on the financial
markets and the global economy.
The risk is likely to remain high in
2021.
No change
Given our market share of both
IPO and secondary fund raisings
in 2020, we believe our
reputation remains strong. This
has been enhanced by the
Company’s ability to continue to
operate effectively and raise
funds for its corporate clients
throughout this period of
adversity including completing
the largest IPO on AIM in 2020,
the largest new investment
company in 2020 and the best
16
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Governance
Financial
legal or conduct risks or a
failure to meet the
expectation of one of the
Company’s stakeholders.
Company’s reputation and could
cause significant harm and
detriment to its ability to continue
to operate.
Strategic
The Board recognises that
the key to the Company’s
long-term success is the
clear articulation and
execution of its strategy.
COVID-19 has meant a global shift
in focus, making plans for the
long-term irrelevant if the short
and medium-term, cannot be
navigated through.
performing IPO on AIM in 2020.
There is, however, no room for
complacency with a continued
focus on all mitigating factors.
The residual risk remains static.
No change
Cenkos’ financial performance in
2020 has further enhanced its
cash and capital position, while
the restructuring programme and
review of overheads completed in
2020 significantly reduced its cost
base. This demonstrates a
reasonable execution of the
strategy.
An increase in residual risk
reflects a reduction in the
number of retained clients,
highlighting the need for
improvement in performance in
some areas.
Increase in residual risk
which must approve any new
business and/or appointments.
These are both chaired by Nick
Wells, Co-Head of Corporate
Finance and Sponsor Services, with
other skilled and experienced
members to appropriately support
and challenge.
The New Business Committee, one
of the Company’s key corporate
governance committees has been
enhanced to ensure the escalation
and consideration of matters
which may cause detriment to the
Company’s reputation and/or that
of its clients. Company-wide
training by the Co-Heads of
Corporate Finance and the Head
of Compliance was conducted
during the course of 2020 to re-
emphasise the importance of
escalation during the prolonged
periods of remote working.
Emphasis is placed upon hiring the
right people with a strong work
ethic and professional mindset.
We regularly engage with
stakeholders and market
practitioners to understand how
our reputation is perceived.
The Executive Committee (“ExCo”)
is subject to robust and healthy
challenge from the Board and its
sub-committees on the Company’s
strategic direction and execution.
The Board reviews strategy
execution and the risks that
threaten the achievement of the
strategy.
Since the outbreak of COVID-19 in
the UK, a Crisis Management Team
has been established to deal with
the primacy issues faced by a
remote workforce but also to
inform medium-term strategy to
ensure that Cenkos is well placed
to take advantage of the green
shoots of recovery as and when
they emerge.
The corporate governance
structure and relatively small size
of the Company ensures that the
Board has sufficient, well-
articulated, timely and accurate
information on which they can
make informed decisions and gain
appropriate levels of assurance.
Conduct,
regulatory &
legal
Conduct risk is defined as
the risk that inappropriate
behaviour, conduct or
practices result in poor
outcomes for clients, the
Company or for the
wholesale markets.
Regulatory and legal risk is
the risk of fines, penalties,
sanctions or legal action
arising from the Company’s
failure to identify or meet
Remote working required as a
result of the national and local
lockdowns which commenced in
March 2020 has required a
different level of management and
oversight. Failing to acknowledge
this and embed different
supervisory approaches to
accommodate the shift in working
practices could lead to an
increased risk of poor conduct and
regulatory non-compliance.
The Company monitors and
improves systems and controls
where necessary and as new
regulation and legislation requires
this or where market practice and
regulatory expectations develop.
Continued enhancement of the
Company’s systems and controls
remains a focus for the
Compliance function together with
a continued strengthening of the
corporate governance framework.
Regulatory obligations are
significant and the pace of change
continues with the supervisory
imperatives set forth by the FCA
together with ongoing changes as
a result of the UK’s withdrawal
from the EU, the continued focus
on sustainability issues including
the increase in prominence of
ESG factors in business
operations, company disclosures
and investor sentiment and the
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Governance
Financial
regulatory, legislative or its
legal requirements.
Implementation of the
Senior Managers and
Certification Regime at the
end of 2019 has rightly put
the focus on senior
management and those
performing FCA certification
functions to be responsible
and accountable. The
Conduct Rules, which
accompanied this in many
ways, codified what is and
should be the right
behaviour and ensure the
right culture.
Operational
resilience
Operational risks can arise
from the failure of the
Company’s core business
processes or one of its third-
party providers.
As noted above, COVID-19 has
required business continuity plans
to be viewed through a new lens
where previously these would
unlikely have factored the entire
work force working remotely for a
prolonged period of time. The
technology which made this
possible has become critical to the
Company’s operational resilience
enabling our service provision to
clients to continue uninterrupted.
This included understanding our
outsource providers’ operational
resilience where our ability to
provide uninterrupted business
services was predicated on their
ability to continue to provide their
business activities.
As noted above, training in this
regard was carried out through a
combination of internal training
delivered by the Head of
Compliance and other senior
managers and external third
parties as appropriate. The culture
project, initiated by the Chief
Executive Officer in December
2019 has assisted in developing
the senior management team’s
insight into conduct, and enable
better oversight of the regulatory
and legal risks to which the
Company is exposed.
During these unprecedented
times, the senior management
team has developed
communication techniques to
continue to demonstrate
leadership and enable close
oversight of the Company’s
business activities including firm-
wide Town hall meetings, new
approaches to the previously face-
to-face team and departmental
meetings and training delivered
virtually.
We aim to be able to sustain
resilient operations and client
services with minimum disruption
from a combination of strong
supplier relations, cloud-based
data storage, remote collaborative
communication tools and business
continuity planning.
Senior management is actively
involved in identifying and
analysing operational risks to find
the most effective means to
mitigate them.
COVID-19 resulted in the Company
immediately switch to remote
working, providing all employees
with IT solutions and equipment
necessary to ensure they could
operate successfully remotely.
Financial
Financial risks are set out
and described in more detail
in note 24 to the financial
statements.
Financial risks include:
◼ Market;
◼
◼
◼
Credit/Counterparty;
Liquidity; and
Capital.
COVID-19 has had an
unprecedented impact on the
global economy, the health of the
financial markets and the way in
which business is conducted.
Although Cenkos has adapted well
to remote working, as lockdown
restrictions are lifted, the impact
of government policy to stimulate
the economy, on-going investor
sentiment and the impact of
COVID-19 on the business of its
clients will define the challenges
ahead.
As a regulated entity, the
Company is required to stress test
its business model under various
scenarios to measure its resilience
in terms of its solvency and
liquidity (Internal Capital
Adequacy Assessment Process
(“ICAAP”) and Individual Liquidity
Adequacy Assessment (“ILAA”))
and its recovery capacity under
stress (Recovery and Resolution
Plan (“RRP”)). These reports are
updated regularly and reviewed by
the ARCC and Board – see the
Governance report.
role that the financial services
sector plays in this important
area. We continue to strengthen
our systems and controls in order
to ensure the Company’s robust
approach to its regulated
activities enables it to remain
relevant and focused.
The ongoing remote working
environment, embedding of the
certification regime within the
Firm and the increased focus on
conduct and operational
resilience in light of COVID-19,
the residual risk remains static.
No Change
Operational risk exposures
remain at similar levels to those
in prior years, with the exception
of technology, information
security, cyber security and fraud,
where the risk has increased as a
result of the pandemic.
While we continue to invest in
training our people to understand
and manage those risks,
especially in the remote working
environment, there is, as a result,
a moderate increase in residual
risk after mitigating actions.
Increase in residual risk
The significant stress that COVID-
19 has caused the global
economy and financial markets
has been modelled, in all but
name, in the stress tests detailed
in the Firm’s ICAAP, ILAA and RRP.
In addition, the strength of the
Company’s balance sheet, the
flexibility of the business model
and reduced fixed cost base,
results in it being well placed to
face the challenges ahead.
Notwithstanding this strength,
the financial risk exposures are
similar to the previous year.
Consequently, a moderate
increase in residual risk after
mitigating actions.
Increase in residual risk
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Governance
Financial
Financial position
During the year, our net assets increased to £25.6m (2019: £24.7m) due to Cenkos’ profitable performance for 2020. The statement
of financial position reflects this profitability as the aggregate impact of the increase in cash and cash equivalents to £32.7m (2019:
£18.3m), partially offset by the increase in trade and other payables to £29.5m (2019: £19.9m) resulting from an increase in the accrual
for variable remuneration in line with the Cenkos’ performance and a decrease in net trading investments as book limits were reduced
to protect against market volatility. The increase in cash mentioned above reflects that generated from transactional activity during
the year but partially offset by the payment of dividends of £1.0m (2019: £2.5m) and the acquisition of own shares to satisfy employee
incentive schemes of £2.0m (2019: £1.3m).
Net assets summary
Non-current assets
FVOCI financial assets
Other current financial assets
Other current financial liabilities
Net trading investments
Trade and other receivables
Trade and other payables - current
Trade and other payables - non current
Cash and cash equivalents
2020
£ 000's
5,202
-
5,312
(1,011)
4,301
12,993
2019
£ 000's
5,611
60
8,973
(1,840)
7,193
13,455
(24,520)
(14,715)
(5,086)
32,735
25,625
(5,219)
18,333
24,658
Change
£ 000's
(409)
(60)
(3,661)
829
(2,892)
(462)
(9,805)
133
14,402
967
At 31 December 2020, Cenkos had surplus capital in excess of the Pillar 1 regulatory capital requirements of £14.5m (2019: £13.5m)
equating to a solvency ratio of 266% (2019: 226%). The Board continues to review the amount of capital held over and above our
minimum regulatory requirement as part of the ICAAP and the cash balances required to meet the working capital needs of the
business as part of the ILAA especially in light of the COVID-19 pandemic, its impact on the financial markets and the global economy.
The Board’s intention is to use earnings and cash flow to underpin shareholder returns through a combination of dividend payments
and share buy-backs. Our goal is to pay a stable ordinary dividend, reinvest into our Firm and return excess cash to shareholders
subject to capital and liquidity requirements and the prevailing market conditions and outlook. The Board is confident in the Group’s
strong capital position and encouraged by the strategic direction it is heading in and is pleased to announce a final dividend of 2.5p
per share (2019: 1.0p per share) which results in a total dividend for the year of 3.5p per share (2019: 3.0p per share).
From time to time, it is the intention to purchase shares to match unvested share awards and manage our issued share capital.
This report was approved by the Board of Directors on 19 March 2021 and signed on its behalf by:
Jim Durkin
Chief Executive Officer
19 March 2021
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Stakeholder Engagement
A key focus of the Board is to promote the success of the Company for the benefit of its members as a whole, while having regards to
other matters as outlined in Section 172 of the Companies Act 2006. Section 172 of the Companies Act 2006 requires a director of a
company to act in the way they consider, in good faith, would most likely promote the success of the company for the benefit of its
members as a whole. As part of the Board’s decision-making process, the Board and its Committees consider the potential impact of
decisions made on relevant stakeholders whilst also having regard to a number of broader factors, including the impact on the
Company’s operations and the likely consequences of decisions made in the long term. Set out below are the Company’s key
stakeholder groups and how the Board and the Company have engaged with them during the year.
Staff
The Board through the Chairman and the Chief Executive Officer and Management engages with its employees through various
mediums, including staff forums and “Town Hall” meetings. Throughout the year the Chief Executive Officer has led a weekly Town
Hall meeting for all employees. This weekly meeting has been used as a forum to keep staff updated on all the developments through
the Company; including business updates; regulations and compliance issues; and strategic initiatives and ensuring that staff are aware
of issues and actions being taken to safeguard their Wellbeing.
During the year, the Chairman instigated and attended ‘virtual lunches’ with almost all the employees in the Company.
The Company also provides its employees with information on matters of concern to them so that their views can be factored into
account when making decisions that are likely to affect their interests.
To assist corporate cultural development and employee engagement in late 2019 an external firm had been appointed to undertake
a cultural assessment. Through 2020 the Board, led by the Chairman, has been assisting Management in implementing and building
on the recommendations made following the conclusion of the cultural assessment review. This initiative together with understanding
and, where appropriate, implementing those recommendations has been critical to the Company being able to identify and manage
the drivers of good behaviour which ultimately maintains the Company’s cultural health and reduces the potential for harm to it, its
clients and the market more generally. Our employees’ conduct is the window through which the Company’s culture can be observed,
measured and assessed and accordingly ensuring that investment and engagement continues to be made in this important area is
critical to the Company being able to demonstrate its high standards of business conduct.
To ensure the Wellbeing of our staff the Company instigated a switch to home working from 17 March 2020 ahead of the UK
Government’s national lockdown which commenced on 23 March 2020. This transition was undertaken smoothly and has enabled
the operational resilience of the Company together with preserving the Wellbeing of staff. The Company has continued to operate
normally during the ongoing restrictions. In continuing to support staff while working from home the Company undertook an
employee survey to understand their needs and concerns. All staff have been provided with the necessary IT solutions and equipment
where needed to support them while working at home.
Shareholders
The Board believes that it is important to maintain open and constructive relationships with shareholders and is committed to this
communication. This is Principle 2 of the QCA Corporate Governance Code with which the Company complies. During the year, the
Chief Executive Officer was in regular contact with the Company’s major institutional shareholders and was responsible for ensuring
that shareholders’ views were communicated to the Board. As well as being in dialogue with the institutional shareholders, the Chief
Executive Officer was also in regular dialogue with several significant individual shareholders. Internally, staff also hold approximately
30% of the Company’s ordinary share capital and regular briefings and updates are also provided to staff recognising the importance
for the Company to act fairly to and engage appropriately with all its shareholders.
The Chief Executive Officer communicates the Company’s strategy and results to shareholders and analysts through meetings
following announcements of the Company’s final and half-year results.
Shareholders are normally encouraged to attend the Annual General Meeting at which all members of the Board are available to
answer questions. However due to the COVID-19 issues in 2020, shareholders were asked not to attend the 2020 Annual General
Meeting but to submit questions in advance of the meeting.
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The Company’s website contains electronic versions of the latest and prior years’ annual report and accounts, half-year reports
together with share price and other relevant information concerning the Company including copies of its regulatory announcements
in accordance with AIM Rule 26.
Regulators
The Board recognises the importance of open and cooperative dialogue with its regulators and the Board, together with Management
have a close ongoing relationship with both the Financial Conduct Authority (“FCA”) including Primary Market Oversight and AIM
Regulation both as an AIM Company and as a Nominated Adviser to AIM Companies. Formal scheduled meetings were held
throughout the year with individual Board members, Management and the Regulators. The FCA also receives regular management
information from the Company. A number of Board changes took place during the year as previously announced and as part of this
process the FCA was consulted on each of the proposed changes.
Clients
The Board recognises that the Company’s clients’ interests lie at the heart of the business. Management works closely with corporate
clients to understand their needs and ambitions, so that Cenkos may provide the most appropriate advice and deliver its services most
effectively. Whether this is in relation to fundraising strategies, merger and acquisitions, enhancing or diversifying shareholder lists
or providing objective advice on board composition, the Company’s goal is to achieve the best outcome for its corporate clients.
This ethos applies equally to the Company’s Institutional clients. The depth of our relationships means that we are well placed to
understand their investment strategies and consequently able to assist in the delivery of those including introducing them to
appropriate investment opportunities in terms of size, sector and stage of development.
The Board believes that these close relationships are a key factor in determining the long-term success of the business, with just under
half of our corporate clients having been with Cenkos for five years or more. As a trusted adviser, the Company is actively involved
with its corporate clients in helping them to achieve their respective objectives. Cenkos maintains regular dialogue with them, holding
virtual and physical meetings, arranging investor meetings and, when COVID-19 restrictions permit, undertaking site visits and hosting
physical and virtual events such as the Annual Cenkos Innovators & Investors Forum (unfortunately due to the COVID-19 restrictions
this event could not be held in 2020), regional investor days and, together with its client, MJ Hudson, successfully delivering our first
virtual ESG conference in November 2020 which sought to provide both its corporate clients and investor clients alike with the
opportunity to solidify and understand the impact of ESG factors and similarly investor sentiment and how these are shaping the
future of capital markets. This is all with the aim of facilitating our corporate clients’ opportunities to increase their own investor
exposure and shareholder engagement.
Suppliers
During the year, Cenkos reviewed its arrangements with a number of its key outsource providers and following a move to remote
working it also reviewed its supplier arrangements in this regard. The Company also reviewed its Modern Slavery and Human
Trafficking Statement to ensure that this delivers on the spirit of the legislation.
Community and environment
The Company regularly supports its employees to volunteer with raising funds for local communities and charitable causes. The
Company has agreed to form a Charity Committee which on a more formal and on-going basis, will develop and support the Company’s
engagement with the local community and the charitable causes that it supports.
As detailed in the 2020 ESG Progress Report on pages 21 to 24, the Company has continued to take steps to reduce its impact on the
environment in reducing our carbon footprint. The Company will endeavour to build and positively influence the ESG agenda through
engaging with stakeholders to understand what and how ESG factors are positively or negatively impacting on their objectives and
understanding how we might help them to achieve sustainable businesses.
Members of the Board, both individually and collectively, consider that they have acted together, in good faith, and in a way that
would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the
stakeholders and matters set out in section 172 (1) (a-f) of the Companies Act 2006).
This report was approved by the Board of Directors on 19 March 2021 and signed on its behalf by:
Jim Durkin
Chief Executive Officer
19 March 2021
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2020 ESG Progress Report
At Cenkos, we recognise the importance of embedding sustainability into business practice to help mitigate the issues that our
societies and environment face at a global scale. By considering environmental, social and governance (ESG) factors within our
operations, we can identify opportunities to reduce our negative impact, contribute to positive real-world outcomes and increase our
resilience in a rapidly changing world. This report summarises our ESG activities over the last year and highlights our ambition for
future progress.
Introduction
While we have already identified and managed several ESG factors relevant to our business, we are committed to broadening the
issues we consider and improving our sustainability performance further. We are at an early stage of this journey and our ambition
for the future is steered by the Board. Over the last year we have strengthened our approach to plan and develop initiatives that we
will look to implement going forward, with support from all levels of the organisation. We also recognise that ESG factors are relevant
to all of our stakeholders, including our suppliers and our clients, and we will consider our influence in understanding and engaging
on their own sustainability performance.
Developments during the year
Early in 2020, the Company established an ESG Working Group that reports directly to the Company’s Executive Committee. The ESG
Working Group comprises members from various areas of the organisation and is responsible for the development of the Company’s
ESG policies, procedures and associated reporting and making recommendations to the Executive Committee and Board in this regard.
In Q3 following a recommendation from the ESG Working Group, we engaged an independent ESG consultant to provide an
educational session to management on how ESG matters can be considered more broadly to strengthen sustainability performance
and to assist the Company in drafting a more formal policy and ESG framework and better integrating ESG factors into our governance
framework including the New Business and Supervisory Committees.
In November 2020, the Company through the ESG Committee co-hosted a virtual “Taking AIM at ESG” conference with MJ Hudson.
The purpose of the conference was not only to understand more about ESG factors but to explore the increasing role that ESG factors
play in investors’ investment decisions and how these factors are taking centre stage of non-financial reporting. The conference was
targeted at AIM companies on how they can derive value by integrating ESG into their processes and policies to enable continued
stakeholder engagement and access to the capital markets. More than three hundred attendees joined this conference and the
conference received significant positive feedback.
ESG at Cenkos
For the various elements that fall under the topic of ESG, we have highlighted the initiatives we have implemented to date, as well as
indicating our plans for future progress.
Environmental
The existential threats that the world faces through climate change and biodiversity loss, means that all businesses, including Cenkos,
must identify and reduce environmental impacts where possible.
Our main environmental impact lies in direct and indirect carbon emissions from energy consumption in our offices and from
employee travel. While employee travel has reduced significantly during 2020 as a result of the COVID-19 pandemic and the national
and local restrictions effected by the UK Government and the devolved administrations, as an occupier of older office space, our
challenge lies in increasing the energy efficiency of our London and Edinburgh premises. The Company, with the assistance of a
dedicated facilities manager, continues to look at ways of reducing the Company’s carbon footprint where practical. Although the
amortisation of any capital investment in our office space would lead to an increase in our cost base this would likely be partially
offset by a reduction in costs associated with energy savings and maintenance.
Beyond reducing our carbon emissions, a number of initiatives have been put in place over the last two years to further minimise our
environmental impacts, including the reduction of single use plastic, water saving devices, and recycling and waste management
initiatives.
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We provide recycling bins for a range of materials in our offices and work with suppliers to minimise waste. We use recycled paper
for internal documents. In respect of recycling and waste management over the period from April 2019 to March 2020 our London
office generated 8,680kg of recyclable waste.
In 2019 our Edinburgh office consumed 22,734Kwh of energy. In 2020 this came down to 13,755Kwh. In 2019 our London office
consumed 186,083 Kwh of energy and in 2020 this came down to 148,510 Kwh. This reduction was primarily due to a significant
reduction in the use of our offices resulting from remote working.
The Company encourages cycling as a form of commuting and for staff based in the London office the Company provides storage for
their cycles as well as showering and dressing room facilities. The Company also supports the Cycle to Work Scheme which allows
employees a tax-free loan to purchase a cycle and associated equipment thereby facilitating their ability to make greener travel
choices.
As part of developing an ESG policy and framework going forward, the Company will be looking at providing appropriate
environmental disclosures to strengthen reporting on our progress. As part of our developing ESG framework, we will also consider
how to engage our client and supplier base on their own sustainability practices.
Social
We firmly believe that our people are our main asset, and their wellbeing is of fundamental importance. We also recognise how this
view fits into broader society and our role in encouraging fairness and decent work practices for all.
Response to the COVID-19 Pandemic
While COVID-19 has had a huge impact on the economy and society, it has brought out the very best in our business and people.
Before the Government introduced the lockdown restrictions, we shifted in short order to a remote working model whilst continuing
to provide reassurance to our clients during the significant market falls in March 2020.
We have supported our people throughout the crisis, and we are pleased to report that we placed no one on furlough nor utilised any
of the Government financial support schemes.
The wellbeing of the Company’s employees during the working from home environment has been of paramount importance to the
Board. During the period, a number of initiatives were put in place including an employee survey to understand employees’ views and
concerns, regular manager catch-up meetings, and weekly Company-wide Town Hall calls, where employees were kept updated on
the latest issues. A number of virtual social events to keep in touch within teams and across the Company were also undertaken.
All employees were provided with IT solutions and support as well as equipment to ensure that they could operate effectively remotely
and that they could continue to work successfully and be in regular contact with their colleagues and clients.
Following the relaxation of guidelines in respect of the first lockdown, employees did have the opportunity if they so wished, to return
to working from the office. The offices were adapted to be a COVID-19 compliant environment, and the Company provided the
necessary sanitising and PPE measures together with ensuring that social distancing measures were put in place to protect those
returning voluntarily to the office.
Going forward, the Company will be reviewing the way its employees can work more flexibly in a post COVID-19 environment.
Culture and Employee Engagement
As noted previously, our employees are central to our success in delivering high quality service and advice to our clients. Establishing
a corporate culture and working environment that attracts and retains talent is paramount. Our current data confirms an average
length of service of 6.6 years per employee. We believe this demonstrates our ability to retain talent and continue to provide our
employees with the challenges and development that they seek during their tenure.
Towards the end of 2019, the Company commissioned FTI Consulting (an independent business advisory firm) to undertake a Cultural
Assessment of the Company. The work undertaken involved one-to-one and group interviews with employees at all levels, as well as
a Company-wide anonymised survey. The conclusions from this report were considered by the Board and the Executive Committee in
February 2020 to better understand employee views on the Company’s culture and where enhancements could be made. The
feedback from the process has been central to driving strategic and cultural changes subsequently made within the Company, as well
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as renewing the focus on some core values including adopting a collaborative approach, being entrepreneurial and innovative, and
managing with respect.
To ensure that there was a direct and open engagement between the Board and employees during the year, Lisa Gordon, our new
Non-Executive Chairman, took on an initiative of hosting a series of virtual meetings with employees to build a rapport, emphasising
a speak-up culture in order to better understand their concerns and views. This will be an ongoing initiative and similar such meetings
have already commenced in 2021. There was no set agenda for these meetings and almost all employees took part in this initiative in
2020. Employees were able to discuss openly their concerns in relation to the Company’s strategy, business, day to day operations or
any other matters that they had concerns on.
Learning and Development
The Board is committed to ensuring that its staff are appropriately trained on financial regulation and how it applies to their respective
roles. During 2020, our staff participated in undertaking in total over 1,963 individual hours of compliance and continuing professional
development training. This training took a number of mediums including online courses and virtual sessions delivered in-house by
senior members of Compliance and the Company’s core business areas and tailored virtual training from external third party providers.
Diversity and Inclusion
We are committed to creating a workplace and culture that is welcoming and inclusive for everyone. We value the contribution of all
our people and recognise that diverse backgrounds, experiences, and ideas enable us to grow and remain versatile. The Company is
committed to achieving a working environment which provides equality of opportunity and freedom from unlawful discrimination.
The Company believes that all employees and clients are entitled to be treated with respect and dignity and is committed to actively
opposing all forms of discrimination. The Company has specific policies in place on diversity and inclusion, family related, and flexible
working policies to assist its workforce.
The percentage of females in our workforce is currently 28%. During the year, Lisa Gordon was appointed as the Non-executive
Chairman of the Company, this has increased the female representation on Board and she was the second woman that had been
appointed to the position of Chairman of a small cap broker at that time.
Anti-corruption and Bribery and the Modern-Day Slavery Act
We are committed to ensuring that the behaviours and practices of our organisation, including those within our supply chains, reflect
our own high business standards and compliance with applicable laws and standards. We have a zero-tolerance approach to slavery
and human trafficking and bribery and corruption within our workforce and set the same robust expectations in relation to our supply
chain and vendors.
As a provider of financial services, we do not have a very long or complex supply chain – our main vendors are either providers of
office supplies and support services such as reprographics, IT, recruitment, and facilities management or professional advisers such
as legal, accountancy and advisory firms. Whilst we consider our vendors to be at relatively low risk of engaging in practices of modern
slavery and human trafficking and/or bribery and corruption, we nevertheless remain committed to preventing the occurrence of
such practices both in our business and our supply chain.
We are confident that the policies and procedures that we have in relation to anti-slavery and human trafficking are in compliance
with the Modern Slavery Act 2015 and our public statement, to this effect, is available on the Cenkos website (www.Cenkos.com).
Whistleblowing Policy
Whilst we believe we have a robust framework in place and a commitment to doing the right thing, where these high standards have
not been met, we encourage our workforce to speak up and come forward through our Whistleblowing Policy. Indeed we have
committed to providing all colleagues with a ‘speak-up’ training during 2021 in order to further evidence the psychologically safe
environment that we strive to provide.
Health and Safety
We are committed to providing a safe environment for our employees and visitors. We have arrangements in place to ensure that we
meet ongoing health and safety obligations to our employees and other stakeholders, such as visitors to our premises. Our Board is
ultimately responsible for the overarching Health and Safety policies and procedures and we confirm that we comply with the Health
and Safety at Work Act 1974 and all associated regulations and codes. Although we are still in a lockdown environment, our offices
are COVID-19 secure with a focus on the provision of PPE, social distancing, additional signage, enhanced levels of cleaning, clear
incident protocols and new processes to ensure that employees, clients, and other visitors remain safe at all times.
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Community
While the Company regularly supports its employees to volunteer with raising funds for local communities and charitable causes, an
ongoing initiative is the establishment of a Charity Committee and Community programme to drive forward the charitable agenda for
the Company. Work has commenced in this area and a number of charities that employees would like the Company to support have
already been identified. The Company will also continue to make its employees aware of the give as you earn scheme during 2021.
Community Apprenticeships
During 2020, the Company contributed over £46,000 to the Apprenticeships Levy Scheme. The Company is considering how to assist
in supporting charity funded programmes through the Apprenticeship Levy Gifting Opportunities scheme and hopes to undertake this
initiative in 2021, whereby a proportion of the levy incurred by the Company can be transferred to provide apprenticeship funding in
the community and to charitable organisations.
Governance
Good governance breeds success. It requires effective oversight, sound decision making, a tone from the top that permeates through
the organisation facilitating the right ‘tone from above’. This in turn shapes our culture and results in the best outcome for our clients
and reduction of potential harm to them, to us and to the market more generally. The Board is fully committed in driving the ESG
agenda throughout the Company.
During 2020 and as noted on page 29, we welcomed Lisa Gordon and Julian Morse to the Board as Non-Executive Chairman and
Executive Director, respectively. Lisa’s steadfast approach to governance and Julian’s significant experience in advising Cenkos’ clients
have enhanced Cenkos’ Board dynamic. However, we know that good governance does not start and stop at the Board but that it is
the foundation on which the governance framework is built, and on which the culture of the Company is set. The recent Cultural
Assessment has provided the Board and Executive Committee with considerations for improvement.
The Company has operated a long-established Compliance training programme, which has comprised traditional face to face training,
with seminars and presentations, together with online training provided by a number of external providers. Every staff member is an
Affiliate of the Chartered Institute of Securities and accordingly there are a number of set mandatory course that the staff have to
complete each year. During the year, as well as a number of mandatory courses undertaken for their specific roles, all staff were
provided training on a number of topics including Anti-Money Laundering and Financial Crime, CyberCrime, Integrity & Ethics, Market
Abuse, Misconduct in Wholesale Financial Markets, SMCR and the Company’s Governance framework.
The Governance framework includes not only the Board and its sub-committees noted on page 28 but also a number of executive
management committees that are tasked with ensuring that the Company conducts its business appropriately considering not just
the commercial aspects of a relationship but also the reputational and regulatory aspects too. These structures together with the
close engagement of the Board allow our employees to excel and to be able to harness the entrepreneurial spirit on which the Firm
was originally created.
As an AIM Company, Cenkos has adopted the QCA Code of Corporate Governance for Smaller Companies. Further disclosures in this
regard are set out on pages 25 to 27.
Further details on the Company’s Governance and Risk Management framework are set out on page 28.
Going forward
With the ambition to significantly strengthen our approach to operating responsibly, ESG considerations are core to the Company’s
principles. The Company is working with MJ Hudson to develop a framework that will enable us to identify, prioritise and action on a
wider range of ESG issues to achieve this ambition. The focus for 2021 will be to develop the Company’s policies further, including
considering such issues as flexible working, further reducing the Company’s environmental impact and considering the impact of our
stakeholders, as well as initiatives to support our communities further with the establishment and formalising of a Charity Committee.
Our progress will be captured as part of our developing ESG policy, procedures and reporting framework.
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Governance policy and framework
Governance policy
The Board recognises the importance of high standards of corporate governance and considers that the Company’s success is
enhanced by the imposition of a strong corporate governance framework.
The Board has agreed to apply the Quoted Companies Alliance Corporate Governance Code (“the QCA Code”). The QCA Code is based
around 10 broad principles of good corporate governance, aimed at delivering growth, maintaining a dynamic management
framework and building trust. The application of the QCA Code requires Cenkos to apply these 10 principles and to explain how the
Company meets these principles.
The Board does not consider there to be any practices that differ from the expectations set by the QCA Code during 2020.
The following report sets out how Cenkos has measured itself against these principles in terms of the substance and form of good
Corporate Governance.
Principle One
Establish a strategy and business model which promotes long-term value for shareholders.
Over the past 17 years the Company has established a successful platform that has been profitable in every year of its existence and
delivered strong returns to shareholders. The prime strategy is to become the pre-eminent UK institutional broker to growth
companies and investment funds admitted to trading or listed on a UK market. We aim to achieve this through:
◼ Understanding the needs of our clients, enabling us to deliver successful fund raisings and advice through an innovative and
entrepreneurial approach.
◼ Delivering sustainable, diversified and growing income streams.
◼ Growing revenues by retaining existing clients and gaining new clients.
◼ Creating a strong team culture aimed at attracting and developing talent.
◼ Using our strong balance sheet and capital position to grow the business.
◼ Managing costs and risks carefully.
◼ Upholding a strong ethical and regulatory culture.
◼ Delivering increased shareholder returns.
We have an integrated business model that allows the combined expertise from within the Company to work together for the benefit
of our clients.
Our business is about providing an integrated service to our clients. We offer advice and access to equity finance at all stages of our
clients’ development and provide corporate finance, Nomad and broking, research and execution services to small and mid-cap
growth companies and investment funds across a wide range of sectors, investment funds and increasingly larger companies.
Further details concerning the Company’s strategy and business model can be found on pages 6 to 7.
Principle Two
Seek to understand and meet shareholder needs and expectations.
The Board believes that it is important to maintain open and constructive relationships with shareholders and is committed to this.
During the year, the Chief Executive Officer was in regular contact with the Company’s major institutional shareholders and was
responsible for ensuring that shareholders’ views were communicated to the Board. As well as being in dialogue with the institutional
shareholders, the Chief Executive Officer was in regular dialogue with several significant individual shareholders. Internally, staff also
hold approximately 30% of the Company’s ordinary share capital and regular briefings and updates are provided to staff.
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Principle Three
Considering wider stakeholder and social responsibilities.
The Board recognises that the long-term success of the Company is reliant upon open communication with its internal and external
stakeholders: shareholders, clients, regulators and of course its employees. The Company has close ongoing relationships with a broad
range of its stakeholders and provides them through regular contact with the opportunity to raise issues and provide feedback.
Further details concerning the Company’s wider stakeholder and social responsibilities can be found on pages 19 to 20.
Principle Four
Embed effective risk management throughout the organisation.
The Board is responsible for determining the Company’s risk appetite and for ensuring that the Risk Management Framework is
appropriate and operating effectively. The day-to-day management of risk has been delegated by the Board to the senior executives
across the Firm overseen by the Executive Committee and is underpinned by proportionate systems and controls. The management
of risk is embedded into the Company’s culture where each employee takes on the responsibility of ensuring that the management
of risk is built into all their working practices. The Company continues to develop its risk management framework and an IT Solutions
provider will be assisting in enhancing the risk management framework further in 2021, in implementing an automated system to
assist management on reviewing its risk.
Further details concerning the Company’s Risk Management Framework can be found on pages 14 to 17 of the Strategic report.
Principles Five and Six
Maintain the Board as a well-functioning, balanced team led by the Chairman; and that the Directors have the necessary up to date
experience, skills, and capabilities.
The Board has been undergoing a number of changes to its composition and these changes are detailed further on page 32.
The Board currently consists of two Executive and three Non-executive Directors. The Directors collectively bring a broad range of
business experience to the Board which is considered essential for the effective management of the Company. The Board is
responsible for strategic and major operational issues affecting the Company. It reviews financial performance, regulatory compliance,
monitors key performance indicators and will consider any matters of significance to the Company, including corporate activity.
Certain matters can only be decided by the Board and these are contained in the schedule of matters reserved to the Board. The
Board also delegates certain responsibilities to committees of the Board and reviews the decisions of those committees at each of its
meetings. The day-to-day management of the Company’s business is delegated to the Chief Executive Officer. He is assisted by the
Executive Committee. The Non-executive Chairman is responsible for leading the Board, ensuring its effectiveness and steering its
agenda.
The Non-executive Directors bring independent judgement, knowledge and experience to the Board.
Further details concerning the current individual Directors and their biographies can be found on pages 29 to 30.
Principle Seven
Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
An evaluation of the performance of the Board and its Committees was undertaken by the Non-Executive Chairman of the Board in
respect of 2020. The evaluation process included a written questionnaire for completion by each Director. The review assessed a
number of Board issues including composition, structure, functionality, administration, management, strategy, and succession
planning. The Chairman assessed the feedback and reported her findings to the Board. Some of the main themes and
recommendations resulting from the 2020 Board Evaluation include:
• Continue to increase the employee engagement process including the introduction of regular presentations by senior staff and
heads of department to the Board
• Broaden the focus on succession planning to include the senior and middle management levels.
• Considering enhancements of the flow and content of Management information to the Board to allow the Board to have more time
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to consider strategic issues.
Further details including an explanation of how the evaluation was undertaken and the results of evaluation can be found on page 33.
Principle Eight
Promote a corporate culture that is based on ethical values and behaviours.
The corporate governance arrangements that the Board has adopted are designed to instil a firm ethical code to be followed by all
staff. The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company which in
turn will impact the Company’s performance. The Company strives to achieve and maintain an open and respectful dialogue with
shareholders, clients, regulators and its staff. The importance of sound ethical values and behaviours is crucial to the ability of the
Company to successfully achieve its corporate objectives.
During the year, all staff members undertook relevant training on the FCA’s Senior Manager and Certification Regime. This culture is
reinforced by all staff having to also undertake compulsory mandatory online training on various regulatory and compliance related
issues as well as on ethical values and behaviours with the Chartered Institute for Securities and Investment.
To assist in strategic and organisational change initiatives, corporate cultural developments, and employee engagement an external
firm was appointed to undertake a cultural assessment. Following this various enhancements and actions have been undertaken in
2020 to improve the culture and employee engagement in the Company.
Principle Nine
Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.
The ultimate authority for all aspects of the Company’s activities rests with the Board. The Board has adopted appropriate delegations
of authority which set out matters which are reserved for the Board. Certain responsibilities have been delegated to Board
Committees. The respective Chairman of those Committees reports on those Committee issues to the Board. The Chairman is
responsible for the effectiveness of the Board, while the Chief Executive Officer is responsible for the executive running of the
Company on a daily basis.
The Board retains full and effective control over the Company and holds regular meetings at which financial, operational, regulatory
and other reports are considered. The Board is responsible for the Company’s strategy and key financial and compliance issues.
Further details concerning the reporting and governance structure of the Board and its Committees can be found on pages 31 to 34.
Principle Ten
Communicate how the Company is performing by maintaining a dialogue with shareholders and other relevant stakeholders.
All shareholders can raise questions with the Board at the Annual General Meeting and are encouraged to attend. However, due to
the lockdown restrictions this meeting was held as a closed meeting in 2020. The results of all General Meetings are announced as
soon as possible following the conclusion of the meeting.
All result announcements, annual reports, regulatory news announcements and items detailing recent transactions concerning clients
are made available on the Company’s website (www.cenkos.com).
The Chief Executive Officer meets regularly whether by video, conference call or in person with the main institutional shareholders
and also with the larger individual shareholders at least twice a year (normally after the announcement of the interim and final results
of the Company).
The staff also hold approximately 30% of the Company’s ordinary share capital and regular briefings and updates are also provided to
staff by the Chairman and Chief Executive Officer. During the year this has been undertaken through virtual ‘Town Hall meetings’.
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Governance framework
The Board is authorised to manage the business of the Company on behalf of the shareholders and in accordance with the Company’s
Articles of Association. This is achieved through its own decision-making and by delegating responsibilities to the Board Committees
and to the Chief Executive Officer to manage the business through management committees.
The diagram below sets out the main parts of the Company’s governance framework, the delegations of authority by the Board
together with an indication of how this achieves the required levels of independent oversight.
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Board of Directors (as at 19 March 2021)
Executive Director
Jim Durkin — Chief Executive Officer
Jim was re-appointed as an Executive Director and to the position of Chief Executive Officer of the Company in August 2019 after
relinquishing these positions in July 2017. Jim has more than 35 years’ experience in the securities industry.
Jim is a founder shareholder and joined the Company as head of the corporate broking team in March 2005 and was appointed as an
Executive Director in October 2006. Prior to joining the Company, Jim worked at Collins Stewart. He has worked extensively on the
origination and execution of corporate finance transactions across a range of industries including insurance, property, financials and
utilities.
Executive Director
Julian Morse — Executive Officer
Julian was appointed as an Executive Director of the Company in May 2020.
Julian is Head of the Cenkos Growth Companies Team and has led that team since 2016. He is one of the founding members of the
team having joined Cenkos in 2006. He has over 25 years’ experience in the City where he has advised and raised equity on IPO’s and
secondary fund raisings for a wide range of companies across a broad range of sectors. Previously, Julian was a Director at Beeson
Gregory and Evolution Securities.
Non-executive Directors
Lisa Gordon — Non-executive Chairman
Lisa Gordon was appointed as a Non-executive Director and Chairman of the Company in June 2020.
Lisa has more than 25 years of Board experience, in both Executive and Non-Executive roles at both listed and private companies. Lisa
is a Non-executive Director of Alpha FX Group plc, an AIM listed corporate foreign exchange specialist and she chairs their
Remuneration and Audit Committees. She is also the Senior Independent Non-executive Director at M&C Saatchi Plc, the listed global
marketing group and a Non-executive Director of Magic Light Pictures Limited, a leading film and television production company.
Lisa has held a number of Senior and Board positions. She was a founding Director and the Corporate Development Director of Local
World plc (prior to its acquisition by Trinity Mirror) (2012-2015); the Chief Operating Officer of Yattendon Group (2007-2013), a private
conglomerate; and the Director of Corporate Development of Chrysalis Group PLC, the media group (1994-2004). Prior to this, Lisa’s
early background was in financial services as an analyst with County NatWest Securities.
Lisa is the Chairman of the Company's Nomination Committee and is also a member of the Audit, Risk and Compliance Committee, as
well as the Remuneration Committee.
Andrew Boorman — Non-executive Director
Andrew was appointed a Non-executive Director of the Company in November 2017.
Andrew has extensive financial services experience and has worked with main boards covering remuneration, finance and risk issues
as well as setting business strategies and delivering change management programmes. Since 2013, he has acted as an independent
consultant and has advised boards on strategic human resources issues including conduct, governance, risk management and
remuneration. He has previously held a number of senior roles at Henderson Group plc over a period of 10 years, including Managing
Director, Corporate Services and Group HR Director. Andrew is also a director of BESTrustees Limited which provides governance
services and advice to a number of companies.
Andrew is Chairman of the Remuneration Committee and a member of the Audit, Risk and Compliance Committee as well as the
Nomination Committee.
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Jeremy Miller — Non-executive Director
Jeremy was appointed a Non-executive Director of the Company in July 2019.
Jeremy has over 30 years' investment banking experience working for leading financial services firms. He held senior roles at
Centerview Partners (2009 - 2016) including London Chief Operating Officer, Simon Robertson Associates (2004 - 2009), Dresdner
Kleinwort Wasserstein (1991 - 2003) including being Head of the European M&A Department and James Capel (1985 -1991). Prior to
1985 he qualified as a Chartered Accountant with KPMG and had been seconded to The Takeover Panel. He was previously a Non-
executive Director at Countryside Properties and chaired their Audit and Remuneration Committees. He is Chairman of The National
Merchant Buying Society, one of the UK's largest co-operative societies.
Jeremy is Chairman of the Audit, Risk and Compliance Committee and is a member of the Remuneration and Nomination Committees.
Jeremy also served as the Acting Chairman of the Company from 1 March 2020 to 24 June 2020.
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The Board
Chairman and Chief Executive Officer
The Chairman is responsible for leading the Board, ensuring its effectiveness and steering its agenda. The Chairman is also responsible
for promoting a healthy culture of challenge and debate and to also ensure the successful implementation of good corporate
governance practices with the Board. The Chairman evaluates the performance of the Chief Executive Officer and is responsible for
succession planning and leads the Nomination Committee. Jeff Hewitt served as the Acting Non-executive Chairman of the Company
until his retirement from the Board on 28 February 2020. Following this Jeremy Miller served as the Acting Non-executive Chairman
of the Company from 1 March 2020 until Lisa Gordon was appointed as Non-executive Chairman of the Company on 25 June 2020.
The Chief Executive Officer, throughout 2020 was Jim Durkin, and he is responsible for the executive running of the Company on a
daily basis. This includes making recommendations to the Board on strategy. Jim Durkin has announced his intention to retire from
the Company and from the position of Chief Executive Officer. Subject to regulatory approval Julian Morse, Executive Director will
succeed Jim Durkin as the Chief Executive Officer.
The Board
The Board is responsible for the stewardship of the Company, overseeing this strategy, conduct and affairs to create sustainable value
and growth.
The Directors collectively bring a broad range of business experience to the Board, which is essential for the effective running of the
Company. This is achieved through its own decision-making and by delegation of certain responsibilities to Board committees and by
authority to manage the business to the Chief Executive Officer.
The Board is satisfied that each of the Directors is able to allocate sufficient time to the Company to discharge their responsibilities
effectively.
All Directors receive regular updates and training on legal, regulatory and governance issues. External advisers present to the Board
regularly on thematic topics, providing training that is relevant to the business and to keep them abreast with developments in
governance and AIM regulations. During the year, this included advice from Travers Smith LLP, Simmons & Simmons LLP, Promontory
Financial Group LLP and Spark Advisory Partners Limited (the Company’s Nomad).
All Directors have access to the Company’s Nomad, company secretary, legal advisers and auditors and are able to obtain independent
advice from other external professionals as and when required.
All Directors are properly briefed to enable them to discharge their duties, via regular update calls as well as being provided with
detailed Board packs which are distributed several days in advance of formal scheduled meetings.
The Board meets a set number of times a year and at other times as necessary to discuss formal schedules of matters reserved for its
decision which include:
◼ The Company’s strategy and its associated risks.
◼ Acquisition, disposals, closures and other material transactions.
◼ Risk management strategy and risk appetite.
◼ Financial performance, annual budgets, periodic forecasts, half year results, the Annual Report and Accounts and dividends.
◼ Changes to the Company’s capital structure.
◼ Appointments to and removals from the Board and committees of the Board.
◼ Remuneration policy.
◼ Communication with shareholders.
◼ Conflicts of interest relating to Directors.
The biographical details, skills and experiences of each current serving Directors is set out on pages 29 to 30.
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Board and committee composition
Board composition
The Board has gone through a period of significant change over the past twelve months. On 28 February 2020 Jeff Hewitt who had
served as a Non-executive Director of the Company retired after twelve years’ service. At the time of leaving, he was also undertaking
the position of Acting Non-executive Chairman until Lisa Gordon had received her regulatory approval for this position. On 1 March
2020 Jeremy Miller took on the role of Acting Non-executive Chairman until Lisa Gordon was appointed on 25 June 2020. Jim Durkin,
Andrew Boorman and Jeremy Miller have served throughout the year. On 13 May 2020 following regulatory approval being received
Julian Morse was appointed as an Executive Director of the Company.
The current composition of the Board reflects good corporate governance by having a majority of Non-executive Directors in place.
On 9 December 2020 Jim Durkin informed the Board of his intention to retire from the Company and from the position of Chief
Executive Officer. In accordance with the Company’s Succession Plan the Company announced that Julian Morse, Executive Director
and Head of the Growth Companies Team, was to be Jim Durkin’s successor as soon as regulatory approval is received.
The Company has also announced that Jeremy Osler Co-Head of Corporate Finance and General Counsel will be appointed as an
Executive Director of the Company in addition to his current role as soon as regulatory approval is received.
Board and Committee attendance
The Board is responsible for overseeing the management of the business and for ensuring that high standards of corporate governance
are maintained throughout the Company. There were eight scheduled and eight ad-hoc Board meetings held during the year.
The attendance at Board Meetings during the year is set out below.
Position
At 31 December 2020 or
retirement/resignation
if earlier
Chief Executive Officer
Executive Director
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Jim Durkin
Julian Morse (1)
Lisa Gordon (2)
Andrew Boorman
Jeremy Miller
Jeff Hewitt (3)
Board
Committee
Maximum
possible
attendances
16
7
7
16
16
2
Meetings
attended
Audit, Risk and
Compliance
committee
Nomination
Committee
Remuneration
Committee
Considered
Independent
16
7
7
16
16
1
Y
Y
Y
Y
Chairman
Member
1. Appointed as an Executive Director on 13 May 2020.
2. Appointed as Non-executive Chairman on 25 June 2020.
3. Retired as a Non-executive Director on 28 February 2020.
Balance and independence
During the year ended 31 December 2020, the Board maintained a balance of Executive and Non-executive Directors.
The QCA Code requires that a board should have an appropriate balance between Executives and Non-executive Directors and should
have at least two independent Non-executive Directors. The primary objective is that a board should be of sufficient size that the
requirements of the business can be met and that an appropriate combination of Executive and Non-executive Directors should be
maintained to ensure that no one individual or small group can dominate the board’s decision making. As at 31 December 2020, there
were five Directors: the Non-executive Chairman, the Chief Executive Officer and an Executive Director and two further Non-executive
Directors.
The Board considers that the Non-executive Directors bring considerable valuable and relevant experience to the Board and that they
act in the best interests of the Company, free of any conflicts or undue influence. The Board was satisfied that the Non-executive
Directors remained independent throughout the year.
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The Board has determined that the formal appointment of a senior independent Director is unnecessary given the structure and
composition of the Board. In addition, given the size of the Company and active dialogue with the small number of institutional
shareholders, the Board considers such an appointment would not provide any further benefit in assisting with shareholder
communication.
Directors’ appointments and time commitment
The Company’s Articles of Association require that at every Annual General Meeting all Directors offer themselves for either election
or re-election to the Board.
Non-executive Directors’ letters of appointments stipulate that they are required to commit sufficient time to carry out their duties.
The Board reviews the time commitments of any external appointments that each Non-executive Director may have prior to
recommending their election or re-election to shareholders. The number of external appointments which each Non-executive Director
may have is limited by professional guidelines.
Board induction and training
A personalised induction programme is provided to all new Directors in order to help familiarise them with their duties, the Company’s
culture, strategy, and business model. The programme includes:
◼ Meeting all members of the Board and its committees.
◼ One-to-one meetings with other senior management from all parts of the business.
◼ Access to Board, committee reports, corporate documents, and minutes.
◼ Meeting with relevant external advisors including the Nomad, the external and internal auditors.
A series of technical updates and briefing sessions are arranged with internal and external sources to ensure the ongoing training
requirements of Directors have been satisfied.
Board evaluation
An evaluation of the performance of the Board and its Committees for 2020 has been undertaken.
The Non-Executive Chairman of the Board undertook the formal internal annual evaluation process of the Board and that of its
Committees. The evaluation process included a written questionnaire. The questionnaire was designed to be proportionate to the
nature and size of the Company and to take account t of the various Board changes that had taken place during the year. The review
assessed the effectiveness of all aspects of the Board and of its Committees and includes composition, structure, Board functionality,
Board Administration, Management and strategy, oversight of risk and succession planning.
The Chairman assessed the feedback and reported her findings to the Board. The outcomes and principal findings were discussed with
the Board at a formal meeting and, where appropriate, an action list of objectives, targets and aspirations for the coming year is made
in order that the Board can measure its effectiveness in achieving those targets throughout the year.
Some of the main themes and recommendations resulting from the 2020 Board Evaluation include:
◼ Continue to increase the employee engagement process including the introduction of regular presentations by senior staff and
heads of department to the Board Reviewing the performance of the External Auditors.
◼ Broaden the focus on succession planning to include the senior and also middle management levels.
◼ Considering enhancements of the flow and content of Management information to the Board to allow the Board to have more
time to consider strategic issues.
Board committees
The Board has delegated certain of its responsibilities to its Audit, Risk and Compliance Committee, Remuneration Committee and
the Nomination Committee. Each committee has appropriate terms of reference which have been approved by the Board.
The respective chairman of each committee formally reports to the Board on the activities undertaken by the committee.
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Audit, Risk and Compliance Committee (“ARCC”)
The ARCC is responsible for monitoring the Company’s risk framework, internal control environment and financial reporting. The ARCC
reports to the Board on the Company’s full and half-year results. In addition, the Committee has direct and unrestricted access to the
internal and external audit functions and sets the scope of their work and monitors their effectiveness, independence and objectivity.
Specific responsibilities include:
◼ Monitoring the content and integrity of financial reporting.
◼ Reviewing appropriateness of accounting estimates and judgements.
◼ Reviewing the Company’s risk and compliance policies.
◼ Reviewing the Company’s regulatory reporting procedures and relationship with the regulators.
◼ Reviewing the Company’s risk appetite and making recommendations to the Board.
◼ Reviewing and approving of financial and other risk limits and adherence to them.
◼ Reviewing and challenging the Company’s process for the ICAAP and the ILAA.
◼ Reviewing the performance of the Internal Audit function.
◼ Reviewing the performance of the External Auditors.
The ARCC Report is set out on pages 43 to 46.
Remuneration Committee
The Remuneration Committee’s primary responsibility is to review salary levels, discretionary variable remuneration and the terms
and conditions of service of the Executive Directors. The Remuneration Committee also reviews the compensation decisions made in
respect of all other senior executives and those employees determined to be Code Staff under the FCA’s Remuneration Code
regulations.
The Remuneration Committee is also responsible for determining the overarching remuneration policy of the Company, including the
quantum of variable remuneration after taking into account relevant regulatory and corporate governance developments.
The Remuneration Committee Report is set out on pages 37 to 42.
Nomination Committee
The Nomination Committee is responsible for identifying and nominating candidates, for making recommendations on Board
composition, and for considering succession planning requirements to ensure that the requisite skills and expertise are available to
the Board to address future challenges and opportunities.
The Nomination Committee Report is set out on pages 35 to 36.
Management Committees
To assist the Chief Executive Officer and senior management in the discharge of their duties, the Company has a number of
management committees. These Committees are set out on page 28 under the Governance Framework.
This report was approved by the Board on 19 March 2021 and signed on its behalf by:
Lisa Gordon
Non-executive Chairman
19 March 2021
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The Nomination Committee Report
Introduction
The Nomination Committee has delegated responsibility from the Board for ensuring that the Board has the right balance and skills
to ensure that the Board, its Committees and the senior management can discharge its respective duties and responsibilities.
Members and Meetings
The Committee comprises all Non-executive Directors and was chaired by Jeff Hewitt until his retirement from the Board on 28
February 2020. To ensure that there was no potential conflict of interest, Jeff Hewitt did not participate in the search for a new
Chairman in late 2019. Andrew Boorman acted as the Chairman of the Nomination Committee for this process and also continued in
this role when Jeff Hewitt retired until Lisa Gordon was appointed as Chairman of the Committee in June 2020. Andrew Boorman and
Jeremy Miller served as members of the Committee throughout the year. The members of the Committee have significant experience
in corporate governance and financial matters in the financial services sector.
The Chief Executive Officer and relevant senior executives are invited to attend these meetings as appropriate. The secretary of the
Committee is the Company Secretary. External advisors are consulted on issues, when appropriate.
The Committee met four times during the year.
The composition and attendance of the Committee for the year ended 31 December 2020 is set out below:
Maximum possible attendances
Meetings attended
Lisa Gordon (1) - Chairman of the Committee
Andrew Boorman
Jeremy Miller
Jeff Hewitt (2)
2
4
4
1
1. Appointed as Non-executive Chairman on 25 June 2020.
2 Retired as a Non-executive Director on 28 February 2020.
2
4
4
1
Role of the Committee
The Committee’s primary roles are:
◼ To keep the Board’s composition in terms of competency, skills, experience, background and diversity under regular review in
response to changing business needs.
◼ To identify the competency and experience required for specific Board appointments and conduct the search and selection
process.
◼ To recommend the appointment of new candidates to the Board and the renewal, where appropriate, of existing Non-executive
Director appointments.
◼ To review, support and challenge senior management development and succession plans in order to ensure the executive team is
equipped to oversee governance, financial controls and risk management.
Nomination Committee activity
The Committee focused on senior management development and succession during the year.
In late 2019 the Committee commenced a search for a new Non-executive Chairman; following this in February 2020 the Company
announced that Lisa Gordon would be appointed the Non-executive Chairman of the Company following receipt of her regulatory
approval for the position.
This appointment followed a detailed and robust selection process coordinated with an executive search firm, Lygon Group. The
Committee worked closely with the executive search firm in compiling a list of candidates from various backgrounds and industries.
Candidates were identified, interviewed, and measured against pre-determined criteria.
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The key attributes within the selection criteria included independence and having experience in financial services and in holding senior
Non-executive positions together with an in-depth understanding of the regulatory requirements facing the Company.
Lisa Gordon received regulatory approval in June 2020 and took her position as Chairman of the Company from then.
To strengthen the executive presence on the Board in late 2019 Julian Morse was appointed to the Board, subject to regulatory
approval being received. This approval was received in May 2020 and Julian Morse took his position on the Board then.
In December 2020 Jim Durkin announced his intention to retire from the Company and from the position of Chief Executive Officer.
In accordance with the Succession Plan in place it was announced that subject to regulatory approval Julian Morse would be appointed
to the position of Chief Executive Officer of the Company. It is expected that the approval will be received shortly.
As part of the selection criteria the successor needed to have an excellent understanding of the business and that they needed to be
fully conversant with the regulatory and conduct issues faced within a broking firm, as well as having significant and proven
management skills and business acumen, being able to deliver results, have the vision and drive to implement strategic initiatives and
to reinforce a strong regulatory and ethical culture within the Company.
The Committee had also considered the Company’s longer-term Strategic Plans noting that Julian Morse has been pivotal in
developing the plans as part of the Management team.
The appointment of Julian Morse, who is known to the institutional and to the larger individual shareholders, will also provide long
term stability within the Company going forward.
In December 2020 it was announced that as part of the internal succession plans in place to have senior management presence on
the Board, the Committee recommended the appointment of Jeremy Osler, Co-Head of Corporate Finance and General Counsel to
the position of Executive Director. This appointment will take effect once regulatory approval has been received.
Diversity
The Board seeks to ensure it remains an effective driver of diversity in its broadest sense, having regard to gender, ethnicity,
background, skill set and breadth of experience, both in Executive and Non-executive appointments and in recruitment practices
throughout the Company.
Induction Process
On joining the Board, new members receive a comprehensive induction, involving meetings with management and external advisers.
If required, they will also receive training and regulatory updates to enable them to undertake their roles. The programme is tailored
for their role.
This report was approved by the Nomination Committee on 19 March 2021 and signed on its behalf by:
Lisa Gordon
Chairman of the Nomination Committee
19 March 2021
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Remuneration Committee Report
Introduction
The Remuneration Committee has delegated responsibility from the Board for developing the Company’s remuneration strategy and
for setting the remuneration of its Executive Directors and senior executives.
Members and Meetings
The Remuneration Committee comprises all Non-executive Directors and is chaired by Andrew Boorman. As set out in his biography
on page 29, Andrew has significant and related experience advising main boards on strategic human resource issues including
governance, risk management and remuneration. Jeremy Miller served as a member of the Committee throughout the year; Lisa
Gordon served since her appointment on 25 June 2020; and Jeff Hewitt served until his retirement on 28 February 2020. The members
of the Remuneration Committee have significant experience in corporate governance and financial matters in the financial services
sector.
The Remuneration Committee met seven times during the year. The Chief Executive Officer, Head of Human Resources, Head of
Compliance, Head of Finance, other Executive Directors and relevant senior managers are invited to attend these meetings as
appropriate but are not present when their own remuneration is discussed. The secretary of the Remuneration Committee is the
Company Secretary. External advisors are consulted on remuneration and regulatory issues, when appropriate.
The composition and attendance of the Remuneration Committee for the year ended 31 December 2020 is set out below:
Maximum possible attendances
Meetings attended
Andrew Boorman - Chairman of the Committee
Lisa Gordon (1)
Jeremy Miller
Jeff Hewitt (2)
7
2
7
-
1. Appointed as Non-executive Chairman on 25 June 2020.
2. Retired as a Non-executive Director on 28 February 2020.
7
2
7
-
Role of the Remuneration Committee
The Remuneration Committee’s primary responsibility is to review salary levels, discretionary variable remuneration and the terms
and conditions of service of the Executive Directors. It also reviews the compensation decisions made in respect of all other senior
executives and those employees determined to be Code Staff under the FCA’s Remuneration Code regulations. The Remuneration
Committee is also responsible for determining the overarching remuneration policy applied by the Company, including the quantum
of variable remuneration and the method of delivery, taking into account relevant regulatory and corporate governance developments
including the Senior Managers and Certification Regime (“SMCR”).
Remuneration policy
The Company’s remuneration policy is designed to attract and retain individuals of the highest calibre and probity and reward them
so that they are motivated to grow and share in the success of the long-term value of the business. Remuneration consists of two
components, namely a moderate base salary and a variable performance-related award. The performance-related aspect reflects the
success or failure of the Company in meeting its targets and objectives and is, therefore, substantially reflective of the Company’s
overall financial performance. Variable remuneration is discretionary and paid through the Company’s profit-sharing model and is
only paid to revenue generating staff when it is demonstrated that a team or an individual’s performance has contributed to the
profitability of the business, after relevant direct and associated costs have been deducted and risk factors (including behaviour and
conduct) have been considered and taken into account. Other employees who are not directly involved in revenue generation are
also considered for a discretionary variable performance award depending on their performance and the Company’s overall financial
results, once risk factors (including conduct) have been taken into account. All variable remuneration is subject to the terms and
conditions of the Company’s deferral scheme whereby a portion of variable remuneration is deferred and vests in shares over a three-
year period.
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A review of the overall remuneration policy has been undertaken during the year and the policy for 2021 will be that any variable
compensation will primarily be based on a profit sharing model for the whole Company (rather than each business team), whereby
an indicative percentage of the Company’s overall profitability (subject to the approval and discretion of the Remuneration
Committee) will go into one discretionary profit pool. Any individual distributions will continue to be discretionary and will continue
to take regulatory, risk, behaviour and conduct issues into account.
For 2021 a new Long Term Incentive Plan for Executive Directors’, Senior Managers and other key staff is being established. The Plan
will be a based over a five-year period and will only vest on the satisfaction of performance conditions which will be measured over a
period of three, four and five years being met. There will be a further two-year holding period requirement for Executive Directors
and certain other Senior Managers. The Plan will align the interests of the Senior Managers with the shareholders to ensure the long-
term growth in the business and to maximise shareholder returns.
Regulatory considerations applying to the Company’s remuneration approach
The Company’s approach to remuneration takes account of relevant legislation, regulation, corporate governance standards and
guidance issued by regulators and shareholder representative bodies. The Company follows the Financial Conduct Authority – IFPRU
Remuneration Code (the “Code”); however, on the basis of proportionality the Company has dis-applied certain remuneration
principles within the Code. This includes the application of a bonus cap and certain elements of the deferral provisions, although the
Company does have a bonus deferral scheme in place for all employees. For the year ended 31 December 2020, the deferral has been
widened to cover all employees irrespective of their total remuneration and the percentage of deferral has also increased. This will
have the effect of increasing share ownership amongst all employees and will align their interests further with those of the
shareholders.
The Remuneration Committee continues to monitor the regulatory environment and consider any impact on the Company’s
remuneration policies in particular with the introduction of SMCR.
Remuneration for the year
The Directors’ remuneration and other benefits (medical and life assurance cover) during the year in respect of the performance of
their role as a Director for the year ended 31 December 2020 (or date of resignation if earlier) are set out in the table below.
Annual
Performance
Award 2020(9)
Vested cash
award received in
respect of the
2017 deferred
bonus scheme
£000s
£000s
Base salary
/fees 2020
£000s
Benefits 2020
£000s
Total 2020
£000s
Total 2019
£000s
250
95
–
–
–
–
59
66
78
40
588
371
588
–
–
–
–
-
–
–
–
959
3
–
–
–
–
–
-
–
–
–
3
4
2
–
–
–
–
-
–
–
–
6
628
685
–
–
–
–
59
66
78
40
99
-
311
260
132
56
-
66
27
105
1,556
1,056
Directors
Executive Directors
Jim Durkin (1)
Julian Morse (2)
Anthony Hotson (3)
Paul Hodges (4)
Joe Nally (4)
Philip Anderson (5)
Non-executive
Directors
Lisa Gordon (6)
Andrew Boorman
Jeremy Miller (7)
Jeff Hewitt (8)
1. Appointed as an Executive Director and to the position of Chief Executive Officer on 12 August 2019.
2. Appointed as an Executive Director on 13 May 2020.
3. Resigned as an Executive Director on 12 August 2019.
4. Resigned as an Executive Director on 18 September 2019.
5. Resigned as an Executive Director on 31 March 2019.
6. Appointed as Non-executive Chairman on 25 June 2020.
7. Appointed as a Non-executive Director on 22 July 2019.
8. Retired as a Non-executive Director on 28 February 2020.
9. The Annual Performance Award for 2020 is subject to the Company’s Deferred Bonus Scheme which takes the form of a share award which vests equally over a three-
year period. Amounts shown for Executive Directors are net of the deferred amount. See note 23 for further details on the Deferred Bonus Scheme.
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The Company has a workplace pension scheme (the “Scheme”) with Aviva. Jim Durkin has opted out of the Scheme. Since Julian
Morse’s appointment to the Board the Company has contributed £833 to this Scheme on his behalf. The Non-executive Directors are
ineligible for this Scheme. The Company does not operate any other pension scheme on behalf of its employees or Directors.
Basis of determining Annual Performance Awards for Executive Directors
The annual performance award is a significant variable component of the overall remuneration of Directors and senior managers but
is at the sole discretion of the Remuneration Committee.
The variable component of the profit-sharing model reflects the financial success of the teams within Cenkos, taking account of
conduct risk and other factors.
The level of performance award that will be made to Executive Directors in 2020 is based upon a number of performance measures
including:
◼ The financial performance of the Company;
◼ Shareholder returns;
◼ Risk factors including conduct and SMCR adherence; and
◼
Individual performance measures:
◼ - Strategic development of the Company;
◼ - Leadership and culture; and
◼ - Development of the Executive team.
Remuneration principles used in recruitment
The Company may choose to compensate potential employees for remuneration forfeited by them as part of the recruitment process,
where amounts are reasonable and there is tangible proof in support of forfeiture.
The Company will not make any form of guaranteed variable compensation commitment above and beyond buyout provisions (which
are subject to the employee remaining in employment) or that fall outside the exceptional circumstances envisaged within the
relevant regulation.
Payments for loss of office
The Remuneration Committee may agree additional exit payments where such payments are made in good faith to discharge existing
legal obligations, or as damages for breach of such obligations, or in settlement (but not necessarily admission) or compromise of any
claim.
Non-executive Directors’ remuneration
Non-executive Directors’ remuneration is set by the Board based upon the recommendation of the Executive Directors considering
comparisons with peer group companies, experience, and responsibility of the individual and the level of work carried out in the year.
Remuneration comprises an annual fee with reimbursement of all reasonable expenses. The Chief Executive Officer has recommended
that if any additional work is undertaken by a Non-executive Director (at the request of the Company) then a further fee may be paid
to them covering the additional work and time required. Any such work is usually undertaken providing the Board is fully satisfied
that the Non-executive Director is independent, and objectivity is not compromised in any matter. There were no additional fees paid
in 2020 (2019: £Nil).
The annualised base fee for 2021 for the Non-executive Chairman is set at £150,000 and for the remaining Non-executives is set at
£61,000. Jeremy Miller and Andrew Boorman also receive an additional fee of £5,000 for undertaking the Chairmanship of a Board
Committee.
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Governance
Financial
The Non-executive Directors’ base fees, and extra responsibility allowances for acting as chairman of a Committee during the year,
are set out below.
Lisa Gordon (1)
Andrew Boorman (2)
Jeremy Miller (3) (4) (5)
Jeff Hewitt (6)
Base fee
2020
£000s
59
61
73
16
209
Additional fee
for acting as
Chairman of a
Committee 2020
£000s
Notice payment
under Letter of
Appointment
2000
Total 2020
£000s
Total 2019
£000s
-
5
5
-
10
-
-
-
24
24
59
66
78
40
243
-
66
27
105
198
1. Appointed as Non-executive Chairman on 25 June 2020.
2. Within the base fee was £5,000 which was awarded in shares in the Company.
3. Appointed as a Non-executive Director on 22 July 2019.
4. Within the base fee was £6,666 which was awarded in shares in the Company.
5. Within the base fee was an additional fee (pro-rata fee) of £12,000 for acting as the Non-executive Chairman during part of the year.
6. Retired as a Non-executive Director on 28 February 2020.
Directors’ service contracts
Executive Directors
The general principle is that all Executive Directors will have a rolling contract of employment with mutual notice periods of at least
six months. Service contracts do not contain any provision for compensation upon early termination as parties are expected to rely
on employment rights conferred by law.
The table below provides details of service contracts of the Executive Directors as at 31 December 2020.
Executive Director
Jim Durkin
Julian Morse
Date of Appointment
Nature of contract
Notice period
from Company
Notice period
from Director
Next re-election
12 August 2019
13 May 2020
Rolling
Rolling
6 months
6 months
6 months
6 months
2021
2021
Non-executive Directors
Non-executive Directors are engaged under letters of appointment, which are available for Shareholders to view at the Company’s
registered office and will be available at the Annual General Meeting.
The table below provides details of the date of appointment of the Non-executive Directors together with the next election or re-
election date as at 31 December 2020.
Date of Appointment
Next election or re-election
Notice period by either party
Non-executive Directors
Lisa Gordon (1)
Andrew Boorman
Jeremy Miller
25 June 2020
17 November 2017
22 July 2019
1. Appointed as Non-executive Chairman on 25 June 2020.
2021
2021
2021
3 months
1 month
1 month
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Financial
Directors’ interests in share options and under Employee Share Plans
The Company has the following share incentive plans (the Non-executive Directors are ineligible for these) through which discretionary
share-based awards can be made:
Company Share Option Plan
The Plan provides for the grant of HMRC tax advantage and non-tax advantage share options. No options were granted under the
Plan during the year (2019: none).
Short Term Incentive Plan
The Plan provides an award of restricted shares, that are subject to vesting restrictions and will generally be released over a two-year
period with 50% of the restricted share award being released after one year and the remainder being released after the second year.
The shares are subject to certain forfeiture conditions. Julian Morse received an award during 2020 but before he was appointed as
an Executive Director of the Company.
The Executive Directors interest in the Company’s ordinary shares that are held in the Short-Term Incentive Plan as at 31 December
2020 are set out below.
Restricted Share Award
as at 1 January 2020
or date of
appointment if later
Awarded during
the year or since the
date of
appointment if later
Vested during
the year or since the
date of
appointment if later
Restricted Share Award
as at 31 December 2020
Executive Directors
Jim Durkin
Julian Morse (1)
-
586,000
-
-
-
-
-
586,000
1. Appointed as an Executive Director on 13 May 2020.
Share Investment Plan (SIP)
The SIP consists of free shares, partnership shares, matching shares and dividend shares. Under the terms and conditions of the SIP,
the free and matching shares are subject to certain forfeiture conditions if they are not held for three years from the award date.
The Executive Directors’ interests in the Company’s ordinary shares that are held in the SIP as at 31 December 2020 are set out below.
Shares held as at
31 December 2020
or date of
appointment if later
Shares subject to
forfeiture conditions
as at 31 December 2020 or
date of appointment if later
Shares held at
31 December 2019
or date of
appointment if later
Shares subject to
forfeiture conditions
as at 31 December 2019 or
date of appointment if later
Executive Directors
Jim Durkin
Julian Morse (1)
1. Appointed as an Executive Director 13 May 2020.
-
18,842
-
6,594
-
18,842
-
6,594
Save As You Earn Scheme (SAYE)
The participants of the SAYE Scheme entered a three-year savings contract with an option to purchase a fixed number of shares at
the maturity date. If a participant stops saving at any time before the end of the savings term the option may lapse.
The Executive Directors’ interests in SAYE options over ordinary shares in the Company as at 31 December 2020 are set out below.
Number held as
at 31 December
2019 or date of
appointment
if later
Granted during
the year or
after date of
appointment if
later
Exercised
during the
year or after
date of
appointment
if later
Cancelled or
Lapsed during
the year or
after date of
appointment if
later
Number held
as at 31
December
2020
Exercise
price
Date of
grant
Earliest
exercise
date
Latest
exercise
date
Executive Directors
Jim Durkin
Julian Morse: (1)
-
21,094
-
-
-
44,698
-
-
-
-
21,094
-
1. Appointed as an Executive Director 13 May 2020.
-
-
-
-
-
85.30p
14 May 18
1 Jun 21
44,698
40.27p
16 Nov 20
20
1 Jan 24
-
30 Nov 21
30 Jun 24
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Governance
Financial
Long Term Incentive Plan (LTIP)
A new LTIP for Executive Directors’, Senior Managers and other key staff is being established for 2021. The LTIP will be a based on a
five-year period and will only vest on the satisfaction of performance conditions which will be measured over a period of three, four
and five years being met. The shares will vest on sliding scale to the extent that the performance conditions have been met. The
awards will be subject to absolute TSR (‘Total Shareholder Return’) measures and will align rewards to the increase in shareholder
value. Comprehensive malus and clawback provisions will be included. There will be a further two-year holding period requirement
for Executive Directors and certain other Senior Managers.
Deferred Bonus Scheme
All variable remuneration is subject to the terms and conditions of the Company’s Deferred Bonus Scheme which takes the form of a
share award which vests over a three-year period. Further details on the Deferred Bonus Scheme can be found in note 23 of the Notes
to the Financial Statements.
The awards under the Deferred Bonus Scheme are set out below:
Deferred share awards
outstanding as at
1 January 2020
or date of appointment
if later
Shares vested during
the year or since the
date of appointment
if later
Awarded during
the year or since the date
of appointment
if later
Executive Directors
Jim Durkin
Julian Morse (1)
No of shares
No of shares
No of shares
-
222,808
-
-
-
-
1. Appointed as an Executive Director 13 May 2020.
Deferred
share award as at
31 December 2020
No of shares
-
222,808
These shares will vest over a three-year period, one-third vesting on each of the anniversaries from the date of grant. The vested
share awards are not included within the remuneration for the year table on page 38.
Directors’ interests in ordinary shares
The Directors’ interests in the ordinary shares in the Company as at 31 December 2020 are shown on page 49 within this Directors’
report. To ensure appropriate alignment with the interests of our shareholders, Executive Directors, individually or with their
connected persons, are expected to satisfy a shareholding guideline of acquiring shares in the Company where that value at least
matches their basic salary within three years from their date of appointment. In addition in this regard a small portion of the fees for
each Non-executive Director is paid in shares rather than cash.
This report was approved by the Remuneration Committee on 19 March 2021 and signed on its behalf by:
Andrew Boorman
Chairman of the Remuneration Committee
19 March 2021
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Financial
Audit, Risk and Compliance Committee Report
Introduction
The Audit, Risk and Compliance Committee (“ARCC”) has delegated responsibility from the Board and is responsible for monitoring
the Company’s risk and regulatory framework, internal control environment and financial reporting.
Members and meetings
The ARCC is chaired by Jeremy Miller. As set out in his biography on page 30, as well as being a qualified accountant, Jeremy has recent
and relevant financial experience. Andrew Boorman served as a member of the Committee throughout the year. Lisa Gordon served
since her appointment on 25 June 2020 and Jeff Hewitt served until his retirement on 28 February 2020. The ARCC meets at least four
times every year. Internal and external auditors are invited to attend all meetings. The Head of Compliance, the Head of Finance and
other members of the Board are also invited to attend. The secretary of the ARCC is the Company Secretary.
The composition and attendance of the ARCC for the year ended 31 December 2020 is set out below:
Maximum possible attendances
Meetings attended
Jeremy Miller - Chairman of the Committee
Andrew Boorman
Lisa Gordon (1)
Jeff Hewitt (2)
5
5
4
-
1. Appointed as Non-executive Chairman on 25 June 2020.
2. Retired as a Non-executive Director on 28 February 2020.
5
5
4
-
Roles and responsibilities
The Board has delegated certain responsibilities to the ARCC and the terms of reference of the ARCC are available on the Company’s
website and the key responsibilities are set out on page 34.
The ARCC reported to the Board on how it has discharged its responsibilities during the year. This has included reporting and making
recommendations on remedial action to address any matters or areas in the Company where the Committee has considered
improvements were required.
Significant issues and material judgements
In discharging its duties during the year, the ARCC considered the following significant issues in relation to the financial statements of
the year:
◼ Ensuring correct revenue recognition for any corporate finance transactions that straddled reporting periods to ensure compliance
with the Company’s accounting policies, as explained in note 1 of the financial statements. There were no issues with revenue
recognition during 2020 or at the year-end;
◼ The appropriateness of valuations of financial instruments, including the valuation of warrants and options held over AIM stocks
and unquoted investments held by the Company, classified as Level 3 in the fair value hierarchy. Valuation factors considered for
any instruments classified as Level 3 include an external option pricing model and associated inputs from external valuation
specialists and for unquoted holdings, the International Private Equity and Venture Capital (“IPEV”) valuation guidelines – as
explained in note 24 of the financial statements;
◼ The deferred bonus scheme and the associated accounting treatment and disclosures in 2020 which included the deferral to future
years of £1.5m (2019: £0.3m) of bonuses from the current year and inclusion of £0.6m (2019: £0.8m) from prior years and an
assessment of the vesting conditionality of the deferrals;
◼ The adverse impact that a post-COVID-19 recession could have in particular in relation to the effect on fee revenue and in adopting
the going concern basis in preparing the Financial Statements. Further details in relation to going concern are set out in note 1 of
the financial statements.
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Governance
Financial
Risk management, compliance and internal controls
The Board is responsible for the overall adequacy of the Company’s system of internal controls and risk management. The Board has
delegated responsibility to the ARCC for reviewing and monitoring the effectiveness of the Company’s systems of risk management,
regulatory compliance and internal control.
The systems of internal control are designed to manage, rather than eliminate, risk. Consequently, these controls provide reasonable,
but not absolute, assurance against material misstatement or loss. The risk management and internal control framework in place
during the year was as follows:
◼ Principal risks have been identified and evaluated by the Board (see Principal risks on pages 14 to 17). Significant risks were
identified and evaluated by the senior managers in the areas of business for which they held responsibility, and these formed the
basis for the risk register compiled centrally and regularly reviewed by the ARCC. The Board inputted a top-down view of risks into
this review. Actions to mitigate risks were a major focus of the Board with delegated accountabilities to relevant management.
◼ The Compliance team review of regulatory and internal control requirements including the risk register to form the basis for testing
and internal audit planning. Oversight and challenge have been maintained by a series of reviews at the ARCC and the Board.
◼ To strengthen the three lines of defence model, second line compliance monitoring was augmented through the use of an
independent regulatory consultancy, Promontory Financial Group LLC.
The identification and evaluation of the risks from the above processes are aligned with the ICAAP, ILAA and the Recovery and
Resolution Plan.
Following a review, the ARCC has concluded that the risk management process supports the Board’s summary of the principal risks
presented in the Strategic report on pages 14 to 17 of this Annual Report.
Internal audit
The internal audit function provided independent assurance over the adequacy and effectiveness of the systems of internal control
throughout the Company.
During the year a number of internal audit reviews were undertaken, and the findings were presented in the first instance directly to
the Chairman and subsequently to the ARCC.
External auditor independence
The ARCC ensures the external auditor has longstanding safeguards in place to avoid the possibility that objectivity and independence
could be compromised. These safeguards include the auditor’s report to the ARCC on the actions it takes to comply with professional,
ethical, and regulatory requirements and best practice, designed to ensure their independence.
The annual appointment of the auditor by shareholders in the Annual General Meeting is a fundamental safeguard to auditor
independence, but beyond this, the ARCC monitors and controls additional, non-audit, work provided by the auditor. The ARCC
considers there are some areas of work that are prohibited by the external auditor, including where:
◼ The provision of the services would contravene any relevant regulation or ethical standard.
◼ The external auditor is not considered to be expert providers of the non-audit service.
◼ The provision of such services by the external auditor creates a conflict of interest for the Board.
◼ The potential services provided are considered to be likely to inhibit the auditor’s independence or objectivity of auditors.
The ARCC has stipulated that the fees paid to the auditor for any individual item of non-audit work should not exceed £20,000 without
approval by the ARCC and any such service should be agreed by the ARCC prior to commencement of the services and be accompanied
by terms regarding liability, cost and responsibilities.
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Governance
Financial
External auditor performance and appointment
The ARCC evaluates the performance of the auditor annually factoring the objectivity and effectiveness of the audit, the quality of
formal and informal communications with the ARCC and the views of management.
The Company last tendered its external audit in 2011, when it appointed Ernst & Young LLP as its auditor. The ARCC is aware of the
regulations on audit tendering and firm rotation arising from the European Commission, Competition and Markets Authority and
Financial Reporting Council. Whilst these regulations do not apply to companies whose shares are admitted to trading on AIM, the
ARCC was mindful of the time that had lapsed since Ernst & Young LLP was appointed. During the year, the ARCC therefore decided
that a tender process for the 31 December 2020 year-end audit would take place.
A number of audit firms were asked to tender for the 2020 audit. Shortlisted firms were asked to submit a tender document. Each
firm had access to a Data Room and were also given access to meet key Company contacts, including Committee members and
Executive management. The meetings were designed both to allow the audit firms to learn about the Company’s business and for the
Company to assess the audit firms’ capabilities, experience, and suitability before submitting their tender documents.
The selection criteria included:
◼ The proposed team, their experience, and personal credentials, including seniority of team, enthusiasm, and succession planning.
◼ Understanding of the organisation, our culture and experience of the stockbroking industry.
◼
Service approach, including transition, planning and delivery. To include:
◼ - Detailed and well-prepared audit plan
◼ - Robustness of proposed audit
◼ - Communication plan
◼ - Process for challenge and raising issues
◼ - Involvement of specialists and technical support
◼ - Form and content of audit committee reporting
◼ - Responsiveness and availability
◼ - Transition proposals
◼ Approach to quality assurance.
◼
Other considerations:
◼ - Pro-activity
◼ - Value-add, including fees
The ARCC considered each of the shortlisted audit firms and also considered the tender documents, feedback from meetings from
management, as well as the presentation documents when reaching its decision. A final shortlist of two audit firms was presented to
the Board in July by the ARCC together with a written submission from the incumbent audit firm Ernst & Young LLP. Following this
process, the Board concluded that BDO LLP should be appointed as the external auditor of the Company to undertake the audit for
2020. The incumbent audit firm Ernst & Young LLP agreed to resign and BDO LLP were appointed to fill the casual vacancy.
In accordance with Section 519 (3B) of the Companies Act 2006, Ernst & Young LLP confirmed to the Company that there were no
reasons and no matters connected with their ceasing to hold office that should be brought to the attention of the members or
creditors of the Company.
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Governance
Financial
External auditor’s fees for audit and non-audit services
The ARCC evaluates the fees charged in light of the performance of the auditor. There has been a reduction in the audit fees compared
with the prior year.
Fee payable to the Company’s auditor for the audit of the Company’s annual accounts
and consolidation
Other assurance services
Non-audit services
Total fees payable to the Company’s auditor and their associates
This report was approved by the ARCC on 19 March 2021 and signed on its behalf by:
Jeremy Miller
Chairman of the Audit, Risk and Compliance Committee
19 March 2021
2020
£000’s
225
42
3
270
2019
£000’s
317
137
-
454
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Governance
Financial
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have
prepared the Company financial statements in accordance with with international accounting standards in conformity with the
requirements of the Companies Act 2006, with the prior period being presented 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. Under company law, the
Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required
to:
◼ Properly select and apply accounting policies.
◼ Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information.
◼ Provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.
◼ Assess the Company’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company
and for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our 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 Strategic report on pages 1 to 21 includes a fair review of the development and performance of the business and the position
of the Company together with a description of the principal risks that it faces.
This statement was approved by the Board of Directors on 19 March 2021 and signed on its behalf by:
Jim Durkin
Chief Executive Officer
19 March 2021
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Governance
Financial
Directors’ Report
The Directors serving during the year ended 31 December 2020 and up to the date of signing the financial statements present their
report on the affairs of the Company (Cenkos Securities plc) together with the audited financial statements and the associated
independent auditor’s report thereon, for the year ended 31 December 2020.
Cenkos is an independent, specialist institutional securities company, focused on small and mid-cap companies and investment funds.
Its principal activity is institutional stockbroking.
Business review and future developments
A review of the Company’s operations and performance during the financial year, setting out the position at the year end, significant
changes during the year and the principal risks to which the Company is exposed is provided within the Strategic report, along with
an indication of the outlook for the future. Our risk management processes are outlined in more detail in the Governance section and
in note 24 of this Annual Report. The Directors have considered section 172 of the Companies Act 2006 and are aware of their wider
responsibilities not only to the Company and its members but also to a wider group of stakeholders; further details concerning the
Company’s considerations of Stakeholder Engagement can be found on pages 19 to 20.
Results and dividends
The results for the year are set out in the income statement on page 58.
An interim dividend of 1.0p per share was paid to shareholders on 20 November 2020 (2019: interim dividend of 2.0p per share). The
Directors recommend the payment of a final dividend of 2.5p per share (2019: final dividend of 1.0p per share).
The total interim and final dividends in respect of the year ended 31 December 2020 are 3.5p (2019: 3.0p). Subject to approval at the
Annual General Meeting to be held on 12 May 2021 the final dividend will be paid on 17 June 2021 to the shareholders on the register
at 14 May 2021.
Directors
The names of the current serving Directors of the Company are set out on pages 29 to 30. These Directors have served throughout
the year or since their respective appointments to the Board.
On 9 December 2020 Jim Durkin announced that he would be retiring from the Company and from his position as Chief Executive
Officer in 2021. Jim Durkin served throughout the year. Julian Morse served as an Executive Director of the Company from 13 May
2020 and Lisa Gordon served as a Non-executive Director of the Company since 25 June 2020. Jeff Hewitt retired from the Board on
28 February 2020.
At the Annual General Meeting to be held on 12 May 2021, Lisa Gordon will offer herself for election to the Board. Jeremy Miller,
Andrew Boorman and Julian Morse will offer themselves for re-election to the Board.
Jim Durkin will not be seeking re-election to the Board at the Annual General Meeting.
Share capital
The Company’s share capital comprises one class of ordinary share with a nominal value of 1p per share. As at 31 December 2020,
56,694,783 (2019: 56,694,783) ordinary shares were in issue. No new shares were issued by the Company in 2020 (2019: 1,384,748
ordinary shares). The total voting rights in the Company as at 31 December 2020 was based on 56,694,783 (2019: 56,694,783) ordinary
shares.
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Financial
Directors’ interests in ordinary shares
The Directors’ interests in the share capital of the Company as at 31 December 2020 are set out below.
Number held as at 31
December 2020
Percentage interest as at
31 December 2020
Number held as at 31 December 2019
or date of appointment if later
Percentage interest as at 31 December
2019 or date of appointment if later
Directors
Executive Director
Jim Durkin
Julian Morse (1) (2)
Non-executive Directors
Lisa Gordon (3)
Andrew Boorman
Jeremy Miller
4,985,831
1,371,703
-
88,152
40,000
8.79%
2.42%
-
0.16%
0.07%
4,985,831
1,371,703
-
68,152
20,000
8.79%
2.42%
-
0.12%
0.04%
1. This includes interests in shares held in the Company’s share schemes.
2. Appointed as an Executive Director on 13 May 2020.
3. Appointed as Non-executive Chairman on 25 June 2020.
The Directors have confirmed that none of their ordinary shares have been used for security or have had a charge, lien or other encumbrance placed upon them.
Directors’ interests in options
The Directors’ interests in options over ordinary shares in the Company as at 31 December 2020 are set out on pages 41 to 42 in the
Directors’ Remuneration Report.
Directors’ indemnities
Directors’ and Officers’ liability insurance is maintained by the Company for all Directors and Officers of the Company as permitted by
the Companies Act 2006. The Company indemnifies its Directors against any claim made against them as a consequence of the
execution of their duties as a Director of the Company, to the extent permitted by law and in accordance with its Articles of
Association. The indemnity was in force during the year and up to the date of approval of the financial statements.
Substantial shareholders
In addition to the Directors’ interests shown above, the Directors have been notified of substantial shareholders, set out below, who
have an interest in 3% or more of the Company as at 31 December 2020.
Holder
Canaccord Genuity Group Inc
Andrew Stewart
Nick Wells
Number held at 31 December 2020
Percentage interest at 31 December 2020
5,372,862
5,104,662
2,217,801
9.47%
9.00%
3.92%
Purchase of own shares
The Company has Employee Benefit Trusts (“EBTs”) to service its share schemes and the Deferred Bonus Scheme. The EBTs are funded
by the Company and have the power to acquire shares from the Company or in the open market to meet the Company’s future
obligations. During the year ended 31 December 2020, the EBTs purchased an aggregate of 3,889,889 (2019: 2,297,246) ordinary
shares in the Company. The number of shares purchased represents 6.86% of the Company’s issued share capital as at 31 December
2020 (2019: 4.05%) for an aggregate consideration of £1.96m (2019: £1.28m).
No shares were repurchased by the Company for Treasury (2019: nil).
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Governance
Financial
Employment policies
The Company’s employment policies are based upon a commitment to equal opportunities from selection and recruitment processes
through training, development, appraisal and promotion.
The Company provides its employees with information on matters of concern to them so that their views can be factored into account
when making decisions that are likely to affect their interests.
Employees participate in the success of Cenkos through performance-based incentive schemes including formula-based profit-sharing
arrangements, and the use of employee share plans.
Political donations
During the year, the Company made no political donations (2019: £nil).
Energy and carbon emissions
This is the Company’s first year reporting on carbon emissions under UK Streamline Energy & Carbon Reporting Regulations (SECR).
The Company’s business is predominantly conducted from our offices in London and Edinburgh and as an office-based business our
activities are generally not regarded as having a high environmental impact. The Company’s total carbon emissions for the year have
been determined by multiplying the Company’s total consumption of electricity for the year together with a relevant conversion factor
for Scope 2 electricity.
Energy use and emissions
Energy and emissions
London Office (Scope 2 output)
Edinburgh Office (Scope 2 output)
ooutput)output)
Total
Intensity ratio: emissions per FTE
Business metric:
Intensity ratio units
Intensity ratio value
* BEIS June 2020 Conversion factor
Energy KWh
148,510
13,735
162,245
91
kgCO2e/FTE
0.416
Factor per unit
kgCO2e/kWh*
0.23314
0.23314
Emissions teCO2e
Percent
34.624
3.202
37.826
91.5%
8.5%
100.0%
Intensity ratio
The emissions intensity ratio is based on the average number of full-time equivalents (“FTE”) over the year. We consider the FTE as
the most relevant business metric for the purposes of ongoing intensity ratio reporting.
Energy efficient initiatives that have been undertaken
The Company is working to identify and focus on initiatives where it can make positive difference and some of the existing
sustainability initiatives include:
◼ Ongoing replacement and updating of energy inefficient IT hardware.
◼ Encouragement and assistance is given to staff to cycle to work.
◼
Increased use of video conferencing.
◼ Flexible and remote working initiatives to reduce the need for staff to commute.
Beyond reducing our carbon emissions, a number of other initiatives have been put in place over the last two years to further minimise
our environmental impacts, including the reduction of single use plastic, water saving devices, and recycling and waste management
initiatives.
Further details concerning the Company’s progress in reducing its impact on the environment can be found on pages 21 to 24 of the
2020 ESG Progress Report.
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Financial
Going concern
The Board reviewed the financial information prepared by management to support the fact that it is appropriate to adopt the going
concern basis in preparing the financial statements presented in this Annual Report and Accounts. This included financial forecasts
and modelling which reflected the current and anticipated trading performance for the period to December 2022. These forecasts
were then stress tested to reflect possible adverse effects which could arise including problems with the supply and rollout of the
vaccination program or a failure of Government action to stimulate the economy leading to a prolonged recession, particularly in
relation to the effect on fee revenue. Following this detailed assessment, the Board concluded that it is appropriate to adopt the going
concern basis in preparing the financial statements in this Annual Report and Accounts. Further details in relation to going concern
are set out in note 1 of the notes to the financial statements.
Disclosure of information to the Auditor
Each of the persons who are Directors at the date of approval of this Annual Report and Accounts confirms that:
◼ So far as the director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
◼ They have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit
information and to establish that the Company’s auditor is aware of that information.
The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
Independent auditor
In accordance with good corporate governance practice during 2020 the Company undertook a tender process for its 31 December
2020 year end audit. The incumbent firm at the time Ernst & Young LLP were unsuccessful and agreed to resign on the conclusion of
the tender process. BDO LLP were appointed by the Board to fill the vacancy created by the incumbent auditor’s resignation.
In accordance with Section 519 (3B) of the Companies Act 2006, Ernst & Young LLP confirmed that there were no reasons and no
matters connected with their ceasing to hold office that should be brought to the attention of the members or creditors of the
Company.
BDO LLP has expressed its willingness to continue in office as auditor and a resolution to appoint BDO LLP as auditor of the Company
will be proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The Board continues to monitor the COVID-19 situation. The holding of the Annual General Meeting will be kept under review in line
with official guidance. In the meantime, the Annual General Meeting of the Company has provisionally been convened to be held at
6.7.8 Tokenhouse Yard, London EC2R 7AS on 12 May 2021 at 9.30am.
At the date of going to print of this report, the UK Government's current guidance on restricting social gatherings of more than six
people indoors remains in place. If such guidance remains in place on the date of the Annual General Meeting, shareholders will be
prohibited from attending the meeting. The Board is therefore encouraging shareholders to appoint the Chairman as their proxy
(either electronically or by post) with their voting instructions.
Further details including the current measures that will take place and a copy of the Notice of the Annual General Meeting together
with an explanation of the Resolutions to be proposed is set out on pages 89 to 94.
If any changes are made to the holding of the Annual General Meeting these will in the first instance be detailed on the Company’s
website. Shareholders should visit the https://www.Cenkos/investors/agm for the latest updates.
This report was approved by the Board of Directors on 19 March 2021 and signed on its behalf by:
Stephen Doherty,
Company Secretary
19 March 2021
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Independent Auditor’s report to the Members of
Cenkos Securities Plc
Opinion on the financial statements
In our opinion:
◼ the financial statements give a true and fair view of the state of the Company’s affairs as at 31 December 2020 and of its profit for
the year then ended;
◼ the financial statements have been properly prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006; and
◼ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Cenkos Securities plc (the ‘Company’) for the year ended 31 December 2020 which
comprise the income statement, the statement of comprehensive income, the statement of financial position, the cash flow
statement, the statement of changes in equity and notes to the financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and
international accounting standards in conformity with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs(UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
◼ We have discussed, evaluated and challenged the Directors’ assessment of the Company’s ability to continue as a going concern;
◼ We have reviewed management’s trading and cash flow forecasts for a period of at least 12 months from the date of approval of
the financial statements;
◼ We have substantiated key inputs into forecasts used;
◼ We have considered the accuracy of the Directors’ ability to forecast accurately by considering the actual performance compared
to previous forecasting;
◼ We have challenged management’s assessment and stress test analysis, including reverse stress testing, to determine the risk
posted to the Company in respect of going concern;
◼ We have critically assessed the assumptions used by management in making their assessment and have considered whether the
events or conditions that impact going concern give rise to management bias; and
◼ We have reviewed the Company’s disclosures surrounding going concern throughout the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
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Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Overview
Key audit matters
◼ Revenue recognition over retainer fees and placing fees.
◼ Valuation of material options and warrants classified as Level 3 in
the fair value hierarchy.
Materiality
◼ Financial statements as a whole - £318k based on 1% of revenue.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal
control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a
risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Key audit matter
How the scope of our audit addressed the key audit matter
Key observations
Revenue recognition over retainer fees and placing fees (notes 1 and 3)
Revenue is a key area for the users as it is a strong
indicator of performance. Retainer fees (included within
‘Nomad Broking and Research’ revenue stream) and
placing fees (included within the ‘Corporate Finance’
revenue stream) are recognised
income
statement when under the terms of the contract the
performance obligations have been met such that the
Company is entitled to the fees specified.
in the
We have determined that there is a specific risk that
this revenue is not recognised in the correct period,
particularly for significant deals that are completed
around the reporting date. There is also a risk that fees
recognised are not appropriately supported by signed
engagement letters.
Based on our procedures
performed, we did not identify
any matters which would
indicate that revenue is not
materially recognised in
accordance with the
requirements of applicable
accounting standards.
We responded to this matter by performing tests of detail
which involves substantive testing as set out below.
Our audit testing included, but was not restricted to:
◼ We reviewed the accounting policies for all streams and
assessed their suitability in accordance with IFRS 15.
Placing fees
◼ We obtained a list of placing fees prepared by
management and agreed this to the trial balance at as 31
December 2020. We agreed a sample of clients’ fees to
engagement letters, invoices and bank receipt. We
ensured that engagement letters were appropriately
signed by all required parties;
◼ We agreed the date of placing fees revenue recognised to
gain comfort over the point in time of revenue recognition
by agreeing to correspondence or external
announcements of the completion of deals.
◼ We reviewed cut off at the year end by obtaining the
listing of fees in January 2021 and selecting a sample of
clients to agree back to the source documentation to gain
comfort over the cut off of revenue. We have applied this
approach to the end of the period for a sample of items, to
check that there is no revenue recognised in the year
which should be recognised post year end.
◼ Where there are amendments to fees since the date of the
signed engagement letter, we have obtained alternative
evidence to support fee rates, including an updated
engagement letter and email correspondence with clients.
Retainer fees
◼ We have agreed a sample of client’s fees to engagement
letters, invoices and bank receipt. We ensured that
engagement letters were appropriately signed by all
required parties.
◼ We have performed a recalculation of fees recognised on a
straight line basis, based on client engagement letters and
invoices, to gain assurance over the revenue recognised in
the period and any associated accrued and deferred
income.
◼ Where there are amendments to fees since the date of the
signed engagement letter, we have obtained alternative
evidence to support fee rates, including an updated
engagement letter and email correspondence with clients.
Key audit matters
How the scope of our audit addressed the key audit matter
Key observations
Valuation of options and warrants (notes 1 and 17)
We consider the valuation of the options and warrants
to be an area of high judgement. Financial instruments,
including options and warrants, are received by the
Company in lieu of fees.
The financial instrument valuations are provided by
management’s expert who use the Monte Carlo
simulation, based on information and assumptions
provided by management. There is a potential risk of
misstatement in the financial instruments valuations.
Valuation of Level 3 financial instruments are based on
unobservable inputs and so are subject to estimation
uncertainty.
Our audit testing included, but was not restricted to:
◼ We reviewed the valuation reports prepared by
management’s experts and agreed these to the trial
balance as at 31 December 2020.
◼ We engaged with internal valuations experts, who
reviewed the methodology used by management’s expert
to check the appropriateness of the valuation techniques
and assumptions. We agreed key inputs, such as volatility,
to third party evidence, such as warrant instrument
documentation, where applicable.
◼ We ensured that the valuation methodology applied is in
accordance with the International Private Equity and
Venture Capital (“IPEV”) valuation guidelines.
Based on our procedures
performed, we did not identify
any matters which would
indicate that the options and
warrants are not materially
recognised in accordance with
the requirements of applicable
accounting standards.
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Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Materiality
Company financial statements
2020 £000’s
◼ 318
Basis for determining materiality
◼ 1% of revenue
Rationale for the benchmark applied
◼ We believe that users of the financial statements would typically
focus on an activity-based measure. Given the prominence of
revenue as reflected in the Company’s trading updates to the market,
and revenue being the key benchmark used by the stakeholders to
assess the performance of the Company, we concluded that revenue
is the most appropriate basis of materiality. We have not used an
earnings based measure for the determination of materiality as the
nature of the business is such that the Company is exposed to
macroeconomic and market conditions, which coupled with the
awards of bonuses results in volatility of earnings.
Performance materiality
◼ 206
Basis for determining performance materiality
◼ 65% of materiality
We believe this basis for determining performance materiality is
appropriate, as this is the first year of audit by BDO.
Reporting threshold
We agreed with the Audit Risk and Compliance Committee that we would report to them all individual audit differences in excess of
£6,000. We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual
report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
Matters on which we are required to report by exception
◼
◼
the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent
with the financial statements; and
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which
the Companies Act 2006 requires us to report to you if, in our opinion:
◼ adequate accounting records have not been kept by the Company; or
◼
the Company financial statements and the part of the Directors’ remuneration
report to be audited are not in agreement with the accounting records and
returns; or
◼ certain disclosures of Directors’ remuneration specified by law are not made;
or
◼ we have not received all the information and explanations we require for our
audit.
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates
and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. These
included but were not limited to compliance with Companies Act 2006, the accounting standards and the Financial Conduct
Authority’s regulations.
We focused on laws and regulations that could give rise to a material misstatement in the financial statements. Our tests included,
but were not limited to:
◼ agreement of the financial statement disclosures to underlying supporting documentation;
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Financial
◼ enquiries of management; and
◼ review of minutes of board meetings throughout the period.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there
was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Neil Fung-On (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
19 March 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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Financials
Income statement
For the year ended 31 December 2020
Continuing operations
Revenue
Administrative expenses
Operating profit
Investment income - interest income
Finance costs - interest on lease liability
Profit before tax from continuing operations for the year
Tax
Profit after tax for the year
Attributable to:
Equity holders of Cenkos Securities plc
Basic earnings per share
Diluted earnings per share
The notes on pages 62 to 88 form an integral part of these financial statements.
* Restated as explained in note 10.
Statement of comprehensive income
For the year ended 31 December 2020
Profit for the year
Amounts that will not be recycled to income statement in future periods
Loss on FVOCI financial asset
Tax on FVOCI financial asset
Other comprehensive losses
Total comprehensive income for the year
Attributable to:
Equity holders of Cenkos Securities plc
The notes on pages 62 to 88 form an integral part of these financial statements.
Note
2020
£ 000's
2019
£ 000's
3
4
5
7
8
10
10
31,913
(29,514)
2,399
30
(176)
2,253
(449)
1,804
25,916
(25,801)
115
106
(76)
145
(101)
44
1,804
3.7p
3.3p
44
Restated*
0.1p
0.1p
2020
£ 000's
1,804
(35)
6
(29)
1,775
1,775
2019
£ 000's
44
(46)
9
(37)
7
7
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Statement of financial position
As at 31 December 2020
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax asset
Investments in subsidiary undertakings
Current assets
Trade and other receivables
FVOCI financial assets
Other current financial assets
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Other current financial liabilities
Net current assets
Non-current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Own shares
FVOCI reserve
Retained earnings
Total equity
Notes
2020
£ 000's
2019
£ 000's
11
12
13
20
14
15
16
17
18
19
17
19
21
21
22
382
4,059
33
727
1
5,202
12,993
-
5,312
32,735
51,040
56,242
(24,520)
(1,011)
(25,531)
25,509
(5,086)
(30,617)
25,625
567
3,331
195
(6,607)
(170)
28,309
25,625
517
4,540
67
486
1
5,611
13,455
60
8,973
18,333
40,821
46,432
(14,715)
(1,840)
(16,555)
24,266
(5,219)
(21,774)
24,658
567
3,331
195
(5,436)
(141)
26,142
24,658
The notes on pages 62 to 88 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 19 March 2021.
They were signed on its behalf by:
Jim Durkin
Chief Executive Officer
19 March 2021
Registered Number: 05210733
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Cash flow statement
For the year ended 31 December 2020
Profit for the year
Adjustments for:
Investment income - interest income
Finance costs - interest on lease liability
Tax expense
Depreciation of property, plant and equipment, ROU assets and intangible asset
Fair value adjustment to contingent consideration
Shares and options received in lieu of fees
Share-based payment expense
Operating cash inflow / (outflow) before movements in working capital
Decrease in net trading investments and FVOCI financial assets
Decrease in trade and other receivables
Increase / (decrease) in trade and other payables
Net cash inflow / (outflow) from operating activities before interest and tax paid
Tax paid
Net cash inflow / (outflow) from operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Acquisition of client list
Net cash outflow from investing activities
Financing activities
Landlord incentive received as part of lease arrangement
Rent paid under lease arrangement
Dividends paid
Proceeds from sale of shares to employees on dividend reinvestment
Acquisition of own shares
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 62 to 88 form an integral part of these financial statements.
Notes
8
11
9
2020
£ 000's
1,804
(30)
176
449
691
-
(11)
2,395
5,474
2,867
468
8,301
17,110
(99)
17,011
24
(41)
-
(17)
500
(117)
(1,027)
12
(1,960)
(2,592)
14,402
18,333
32,735
2019
£ 000's
44
(106)
76
101
899
40
(3,987)
1,115
(1,818)
3,598
5,212
(17,861)
(10,869)
(351)
(11,220)
90
(197)
(140)
(247)
500
(613)
(2,485)
40
(1,277)
(3,835)
(15,302)
33,635
18,333
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Statement of changes in equity
For the year ended 31 December 2020
Equity attributable to equity holders
At 1 January 2019
Profit for the year
Loss on FVOCI financial assets net of tax
Gain on derecognition of FVOCI financial assets
net of tax
Total comprehensive income for the year
Issue of shares to employees on dividend
reinvestment
Transfer of shares from share plans to
employees (note 22)
Acquisition of own shares
Credit to equity for equity-settled share-based
payments
Current tax on share-based payments (note 8)
Dividends paid (note 9)
At 31 December 2019
Balance at 1 January 2020
Profit for the year
Loss on FVOCI financial assets net of tax
Total comprehensive income for the year
Issue of shares to employees on dividend
reinvestment
Transfer of shares from share plans to
employees (note 22)
Acquisition of own shares held in treasury
Credit to equity for equity-settled share-based
payments
Dividends paid (note 9)
At 31 December 2020
Share
capital
£ 000's
567
-
-
Share
premium
£ 000's
3,331
-
-
Capital
redemption
reserve
£ 000's
195
-
-
-
-
-
-
-
-
-
-
567
567
-
-
-
-
-
-
-
-
567
-
-
-
-
-
-
-
-
3,331
3,331
-
-
-
-
-
-
-
-
3,331
-
-
-
-
-
-
-
-
195
195
-
-
-
-
-
-
-
-
195
Own
shares
held in
treasury
£ 000's
(5,663)
-
-
-
-
65
1,439
(1,277)
-
-
-
(5,436)
(5,436)
-
-
-
13
776
(1,960)
-
-
(6,607)
FVOCI
reserve
£ 000's
(93)
-
(37)
(11)
(48)
-
-
-
-
-
-
(141)
(141)
-
(29)
(29)
-
-
-
Retained
earnings
£ 000's
29,254
44
-
11
55
(25)
(1,439)
Total
£ 000's
27,591
44
(37)
-
7
40
-
-
(1,277)
775
775
7
(2,485)
26,142
26,142
1,804
-
1,804
7
(2,485)
24,658
24,658
1,804
(29)
1,775
-
13
(776)
-
-
(1,960)
-
-
(170)
2,166
(1,027)
28,309
2,166
(1,027)
25,625
The notes on pages 62 to 88 form an integral part of these financial statements.
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Notes to the financial statements
1. Accounting policies
General information
Cenkos Securities plc is a public company limited by shares incorporated in England, 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.
Basis of accounting
The Company’s financial statements are prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, with the prior period being presented 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. As the Company has no material
subsidiaries, the financial statements presented are for the Company only.
Adoption of new and revised standards
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective
from 1 January 2020, none of which have a material impact on these financial statements.
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, capital and liquidity position are set out in the Strategic report on pages 1 to 21. In addition,
note 24 includes the Company’s objectives, policies and processes for managing its capital, its financial risk management objectives,
details of its financial instruments and its exposures to credit risk and liquidity risk.
The global pandemic of COVID-19, which the World Health Organisation declared as a Public Health Emergency of International
Concern in March 2020 has had a significant impact on the global economy and the health of financial markets. Unprecedented global
lockdowns to stem the spread of the virus has materially impacted financial stability with production and manufacturing together
with many other industries halting activity. The UK commenced its vaccination programme on 4 December 2020 with a commitment
that by 15 February 2021 a first vaccine dose will have been offered to everyone in the top four priority groups identified by the Joint
Committee on Vaccination and Immunisation. The most recent data published by the UK Government suggests that this target has
been achieved and together with the other metrics indicate the UK is now past the peak of the second wave of the virus. However,
we would note that there is still a long way to go before any ‘normality’ resumes and possibly longer still before the economy is able
to start its recovery in earnest. Accordingly, the principal risks to which the Company is exposed are set out on pages 14 to 17 against
the backdrop of the current economic climate as a result of COVID-19 and Brexit.
The second half of 2020 saw an increase in activity as companies looked to the equity markets for fast access to capital. There is,
however, a degree of uncertainty as to whether this will continue depending on the success of Government policy to restart the
economy and navigating a route out of lockdown. Since the end of the year, Cenkos has been appointed by several new clients and
has completed a number of placing transactions. The on-going success of the vaccination programme and a post-lockdown stimulation
package could see this period of increased market activity continue. Alternatively, problems with the supply and rollout of the vaccines
or a failure of Government action to stimulate the economy could lead to a prolonged recession. In turn this would likely have a
negative impact on the health of the financial markets and investor sentiment leading which for Cenkos would result in a reduction in
fees generated from placing and corporate finance and a decline in fair values of listed equities, options and warrants. Management
continues to monitor the impact of the COVID-19 pandemic on the Company, the financial markets and Government policy.
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.
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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.
Cenkos Securities Employee Benefit Trust (‘EBT’)
The Cenkos Securities Employee Benefit Trust (‘EBT’), the Deferred Bonus Scheme EBT and the Share Incentive Plan (‘SIP’) are included
in the Company only numbers and treated as an extension of the Company rather than as a separate subsidiary company. The
Company has no 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.
Intangible asset
Intangible assets relate to the acquisition of a client list, which was initially measured at cost being the fair value at the date of
acquisition. Following initial recognition intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for
an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the
amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the statement of profit or loss in the expense category that is consistent with the
function of the intangible assets. Amortisation is provided at rates calculated to write off the cost over its estimated useful life, which
for the client list is three years.
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 plus, in the case of a financial asset or financial liability not at fair value through profit or loss, any transaction costs that are
directly attributable to their acquisition or issue.
Financial assets are classified into the following specified categories: financial assets as “at fair value through profit or loss” (“FVTPL”),
“fair value through other comprehensive income” (“FVOCI”) and “amortised cost”. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
Financial assets at fair value through profit or loss
Financial assets are classified as at FVTPL when they fail the contractual cash flow test or they are held in a business model that is to
manage them and evaluate their performance on a fair value basis.
Financial assets are classified as financial assets at FVTPL – held for trading 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 fair value through profit or loss 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.
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FVOCI investments
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair
value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for
trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never
recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has
been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in
which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment
assessment.
Financial assets at amortised cost
The Company measures financial assets at amortised cost if the financial asset is held within a business model with the objective to
hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Company’s financial assets
at amortised cost includes trade receivables.
Trading investments
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 in the income statement.
Trade and other receivables
Trade and other receivables are measured at amortised cost using the effective interest method, less any impairment. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial asset or,
where appropriate, a shorter period to the net carrying amount on initial recognition.
Impairment of financial assets
The Company recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit
or loss.
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company
does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The
Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment.
Cash at bank
Cash at bank comprises cash on hand and demand deposits, which 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.
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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 held for trading.
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.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the income statement. The net gain
or loss recognised in the income statement incorporates any interest paid on the financial liability.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value plus any transaction costs that are directly
attributable to the acquisition or issue of the financial liability.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest which is
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.
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.
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 as the proceeds are received, net of direct issue costs.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. If re-issued, the
amount of consideration above the carrying amount is recognised in the share premium account, while if re-issued at an amount less
than the carrying amount the difference is recognised in retained earnings.
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
reporting 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.
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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 reporting 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 in subsidiaries are stated at cost, less any provision for impairment.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for Leases of low value assets and leases
with a duration of 12 months or less.
At the commencement date of a lease, the liability to make lease payments (ie the lease liability) and an asset representing the right
to use the underlying asset during the lease term (ie, the right-of-use asset) is recognised. The interest expense on the lease liability
and the depreciation expense on the right-of-use asset are charged to the income statement and separately recognised.
Property, plant and equipment
Property, plant and equipment is 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 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 on share-based payments is recognised in the income statement
up to the level of the income statement charge with any excess DTA above this being credited directly to 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.
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Revenue recognition
All revenue streams apart from Execution – net trading gains, are recognised in accordance with IFRS 15, to the extent that the fair
value of the consideration received or receivable is expected to flow to the Company. It represents amounts receivable for services
provided in the normal course of business, net of discounts, VAT and other sales related taxes. Where consideration includes financial
instruments or other non-cash items, revenue is measured at fair value using an appropriate valuation method.
Corporate Finance
Revenue under this caption comprises commission earned on primary and secondary capital raising and fees earned in relation to
corporate advisory services, all of 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 Cenkos is entitled to the fees specified. For instance Commission earned on primary and
secondary fund raisings are recognised on the later of the trade date and the date of the client’s EGM to approve the transaction.
Nomad Broking and Research
Revenue under this caption comprises:
◼ Retainer fees from clients for ongoing advice and research services are taken to the income statement over the period of time on
a straight-line basis when, under the terms of the contract, the conditions have been met such that Cenkos is entitled to the fees
specified.
◼ Commission earned from trading shares on an agency basis, which is recognised at the point in time when receivable in accordance
with the date of the underlying transaction.
Execution – net trading gains
Revenue under this caption comprises:
◼ Net trading gains, both realised and unrealised, on financial assets and financial liabilities, arrived at after taking into account
attributable dividends and directly related interest are taken to income on a trade date basis.
◼ Dividend income from investments which is recognised when the shareholder’s right to receive payment has been established.
◼ Fair value gains and losses on options and warrants over securities which have been received as consideration for corporate finance
services rendered. The initial value of the options or warrants is posted to corporate finance revenue and any gain or loss on
subsequent re-measurement posted to income under this caption.
Segment reporting
IFRS 8 requires that an entity discloses financial and descriptive information about its reportable segments, which are operating
segments or aggregations of operating segments. Cenkos is managed as an integrated UK institutional stockbroking business and
although it has different revenue streams it has one consolidated reportable segment. It considers its activities to be subject to similar
economic characteristics. The internal reports used by the ExCo, as chaired by the Chief Executive Officer, for the purpose of
monitoring performance and allocating resources reflect that integration.
Share-based payments
The Company has applied the requirements of IFRS 2 “Share-based payments”. 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 cost of these awards is measured by reference to the fair value determined at the
grant date of the equity-settled share-based payments and the expected number of employees likely to become fully entitled to the
award. This cost is expensed on a straight-line basis over the vesting period. At each reporting 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 the income statement such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to equity.
Deferred Bonus Scheme
In April 2015, Cenkos introduced a Deferred Bonus Scheme (the “Scheme”), the deferred element of any bonus award is to be held in
Cenkos ordinary shares in an EBT and released to the employee evenly split on each of the three anniversaries of deferral into the
Scheme. In prior years, at the date of grant, where an employee already held over £250,000 in Cenkos ordinary shares or £250,000 in
intrinsic value in Cenkos options, the deferral was held in cash on the Company’s statement of financial position and released in the
same manner. The fair value of the cash deferral is recognised as a staff cost over a similar period with the recognition of a
corresponding liability.
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In 2019, the deferred element of any bonus award is to be held in Cash, irrespective of the Cenkos ordinary shares already held by the
employee or their interest in Cenkos options. The Company has applied the requirements of IFRS 2: Share-based payments. The cost
of these cash-settled awards is fair valued at the date of grant and expensed on a straight-line basis over the vesting period. The assets
and liabilities of the EBT have been accounted for as part of the Company.
Related party disclosures
The compensation of the key management personnel of the Company and their interests in the shares and options over the shares of
Cenkos Securities plc are set out in note 25.
Key management personnel comprise senior managers who are members of Executive Committee as they are able to exert significant
influence over the financial and operating policies of the Company.
2. Significant accounting judgement and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of judgements,
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best
knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
The key sources of estimation uncertainty and areas of critical accounting judgement that could 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 Mercer Limited, a third-party valuation specialist, using a Monte Carlo
simulation. Inputs into the model are based on management’s best estimates of expected volatility and risk-free rate of return. As a
measure of implied volatility of the share-based payment is not available, a measure of the historic volatility of Cenkos’ share price
has been used as a proxy. This expected volatility reflects the assumption that the historical volatility over a period similar to the life
of the share-based payment is indicative of future trends, which may not necessarily be the actual outcome. Further details of the
Company’s share-based payment schemes are provided in note 23.
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 the grant date, these instruments are fair valued. Thereafter, at each period end
they are revalued using a Monte Carlo simulation by an external third-party specialist. 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. Further details of the Company’s derivative financial assets are provided in note
24.
c) Revenue recognition under the Corporate Finance where a capital raising transaction straddles a period end
As stated in the accounting policies in note 1, commission earned on a primary and secondary capital raising is taken to the income
statement at the point in time when, under the terms of the contract, the conditions have been met such that Cenkos is entitled to
the fees specified. Where transactions straddle reporting periods consideration is given as to the point in time when Cenkos became
unconditionally entitled to the fees, usually the later of the trade date and the date of the client’s EGM to approve the transaction to
ensure revenue is recognised in the correct accounting period.
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3. Revenue
Revenue is wholly attributable to the principal activity of the Company and arises solely within the UK.
Major Clients
For the year ended 31 December 2020, two clients each contributed more than 10% of Cenkos' total revenue. One contributed £4.2m
and the other £4.0m. (2019: no one client contributed more than 10% of Cenkos' total revenue).
Revenue streams
Corporate finance
Nomad, broking and research
Total fee and commission income
Execution - net trading gains
Total fee and commission income may be further disaggregated as follows:
Services transferred at a point in time
Services transferred over a period of time
2020
£ 000's
22,250
6,175
28,425
3,488
31,913
23,558
4,867
28,425
2019
£ 000's
17,364
6,582
23,946
1,970
25,916
18,416
5,530
23,946
All of Cenkos’s contracts are either for the provision of services within the next 12 months or where revenue is recognised on the
satisfaction of a performance obligation for which the practical expedient in paragraph 121(a) of IFRS 15 applies.
Contract balances
1 January
Transfer to trade and other receivables
Recognised as revenue during the year
Cash received in advance not recognised as revenue during the year
31 December
Contract Assets
Contract Liabilities
2020
£ 000's
316
(316)
178
-
178
2019
£ 000's
414
(414)
316
-
316
2020
£ 000's
(427)
-
427
(549)
(549)
2019
£ 000's
(343)
-
343
(427)
(427)
Contract assets and contract liabilities are included within “trade and other receivables” and “trade and other payables”
respectively on the face of the statement of financial position. They relate to accrued and deferred client retainer fee
income for ongoing advice and research services which under the terms of the contract, are billed either annually, half-
yearly or quarterly in advance or in arrears. These fees are recognised in the Income statement over the period of time to
which they relate, once the conditions have been met such that Cenkos is entitled to the fees specified which may not
necessarily equal the cumulative payments received from clients at each balance sheet date.
4. Investment income - interest receivable
Interest income generated from:
Cash and cash equivalents
Trade and other receivables
2020
£ 000's
2019
£ 000's
16
14
30
93
13
106
Interest income generated from cash and cash equivalents comprises the interest generated from instant access deposits held with
banks.
5. Finance costs - interest on lease liability
Interest on lease liability
2020
£ 000's
176
176
2019
£ 000's
76
76
The interest on lease liability represents the incremental cost of borrowing applied to the lease liability.
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6. Staff costs
Staff costs comprise:
Wages and salaries
Social security costs
Compensation for loss of office
Defined contribution pension
IFRS 2 share-based payments
Cash-settled deferred bonus payments relating to the current year
2020
£ 000's
2019
£ 000's
16,977
2,525
597
102
2,166
229
22,596
12,487
2,077
670
126
777
337
16,474
To comply with the Pensions Act, Cenkos has enrolled all qualifying employees into a defined contribution pension scheme (“the
Scheme”). Under the scheme, qualifying employees are required to contribute a percentage of their relevant earnings. The Company
contributed 3% of relevant earnings (2019: 2% of relevant earnings up to the end of March 2019 and 3% thereafter).
Cenkos has a Deferred Bonus Scheme for Executive Directors, senior managers and high earning employees. As a result, £2.19m (2019:
£0.3m) of staff costs have been removed from the current income statement and deferred to future years. See note 23 for further
details.
The average number of employees (including executive Directors) was:
Corporate finance
Corporate broking
Support services
The total emoluments of the highest paid Director serving during the year were:
2020
2019
20
34
37
91
25
43
43
111
2020
£ 000's
685
2019
£ 000's
311
Details of the remuneration of key management personnel are set out in note 25. Details of the Directors' remuneration is set out in
the Remuneration Committee Report on pages 37 to 42.
7. Profit for the year
Profit for the year has been arrived at after charging / (crediting)
Operating lease rentals
Depreciation of right-to-use asset
Auditors’ remuneration (refer to analysis below)
Depreciation of property, plant and equipment
Staff costs (see note 6)
Net trading gains from financial assets at FVTPL on trading book
Exchange differences recognised in profit or loss
(Increase) / decrease in fair value of share options and warrants at FVTPL
Reversal of provision for impairment
2020
£ 000's
3
481
270
176
22,596
(3,210)
(40)
(553)
-
2019
£ 000's
8
628
454
238
16,474
(2,530)
(47)
571
(216)
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The movement in administrative expenses is further discussed on page 13 in the Review of Performance.
The analysis of auditor’s remuneration is as follows:
Audit of financial statements
Fees payable to the auditor and their associates for the audit of the annual accounts
Other assurance services
Other non-audit advisory services, including taxation
Total fees payable to the auditor and their associates
2020
£ 000's
225
225
42
3
270
2019
£ 000's
317
317
137
-
454
Other assurance services include the fee for the review of the Interim Financial Information and CASS limited assurance report.
A description of the work of the ARCC is set out on pages 43 to 46 of this Annual Report and includes an explanation of how auditor
objectivity and independence are safeguarded when non-audit services are provided by the auditor.
8. Tax
The tax charge is based on the profit for the year (see page 13 of the Review of Performance) and comprises:
Current tax
United Kingdom corporation tax at 19.00% (2019 - 19.00%) based on the profit for the year
Adjustment in respect of prior period
United Kingdom corporation tax at 19.00% (2019: 19.00%)
Total current tax
Deferred tax
Charge on account of temporary differences
Deferred tax prior year adjustment
Total deferred tax (refer to note 20)
Total tax on profit on ordinary activities from continuing operations
2020
£ 000's
2019
£ 000's
671
19
690
(223)
(18)
(241)
449
67
-
67
34
-
34
101
A reconciliation of the tax expense for 2020 and 2019, and the accounting profit multiplied by the standard rate of UK corporation tax
of 19.00% (2019: 19.00%), is set out below:
Profit before tax from continuing operations
Tax on profit on ordinary activities at the UK corporation tax rate of 19% (2019: 19%)
Tax effect of:
Non-deductible expenses for tax purposes
Fair value movements in relation to the DTA on share-based payments
Deferred tax rate change adjustment
Adjustment in respect of prior year deferred tax
Adjustment in respect of prior year current tax
Tax expense for the year
The effective tax rate for the Company during the year is 20% (2019: 70%).
2020
£ 000's
2,253
2019
£ 000's
145
428
35
45
(59)
(18)
18
449
28
36
1
36
-
-
101
In addition to the tax expense presented in the income statement, the following amounts have been recognised through other
comprehensive income and directly in equity:
Other Comprehensive Income (OCI)
Current tax credit arising on FVOCI financial asset
Statement of Changes in Equity (SOCIE)
Current tax credit arising on FVTPL financial asset
2020
£ 000's
2019
£ 000's
(6)
-
(11)
(3)
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9. Dividends
Amounts recognised as distributions to equity holders in the year:
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2019 of 1.0p (2018: 2.5p) per share
Interim dividend for the period to 30 June 2020 of 1.0p (2019: 2.0p) per share
2020
£ 000's
2019
£ 000's
515
512
1,027
1,398
1,087
2,485
A final dividend of 2.5p per share has been proposed for the year ended 31 December 2020 (2019: 1.0p). The proposed final dividend
is subject to approval at the Annual General Meeting and is not recognised as a liability as at 31 December 2020.
10. Earnings per share
From continuing operations
Basic earnings per share
Diluted earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings from continuing operations
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity
holders
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares
Weighted average number of ordinary shares for the purpose of diluted earnings per share
Restated
2019
0.1p
0.1p
2020
3.7p
3.3p
2020
£ 000's
1,804
2020
No.
Restated
2019
£ 000's
44
2019
No.
49,181,282
5,303,193
54,484,475
51,157,915
3,863,279
55,021,194
In accordance with IAS 33, when calculating the weighted average number of shares for the purpose of basic earnings per share,
contingently issuable shares held by the SIP and DBS for the benefit of employees have been deducted. This adjustment is required
by IAS 33 notwithstanding the fact that the employees have an un-forfeitable right to the dividend prior to the date of vesting from
the date of grant. These contingently issuable shares have been included when calculating diluted earnings per share.
Prior year comparatives have been restated to conform with current interpretation of IAS 33 such that there is no adjustment for
dividends on shares held in SIP & DBS in arriving at Earnings for the purpose of basic earnings per share.
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11. Property, plant and equipment
Cost
At 31 December 2018
Additions
At 31 December 2019
Additions
At 31 December 2020
Accumulated depreciation
At 31 December 2018
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
At 1 January 2019
12. Right-of-use assets
Present value of future lease payments
At 31 December 2018
Initial recognition
Lease modification
At 31 December 2019
At 31 December 2020
Depreciation of right-to-use assets
At 31 December 2018
Depreciation of right-to-use asset
At 31 December 2019
Depreciation of right-to-use asset
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Leasehold
improvements
£ 000's
1,692
126
1,818
-
1,818
Fixtures
and
fittings
£ 000's
320
-
320
-
320
IT
equipment
£ 000's
1,924
71
1,995
41
2,036
(1,439)
(52)
(1,491)
(55)
(1,546)
272
327
253
(243)
(42)
(285)
(23)
(308)
12
35
77
Liverpool
£ 000's
-
13
-
13
13
Edinburgh
£ 000's
-
130
-
130
130
-
(13)
(13)
-
(13)
-
-
-
(40)
(40)
(40)
(80)
50
90
(1,696)
(144)
(1,840)
(98)
(1,938)
98
155
228
London
£ 000's
-
716
4,309
5,025
5,025
-
(575)
(575)
(441)
(1,016)
4,009
4,450
Total
£ 000's
3,936
197
4,133
41
4,174
(3,378)
(238)
(3,616)
(176)
(3,792)
382
517
558
Total
£ 000's
-
859
4,309
5,168
5,168
-
(628)
(628)
(481)
(1,109)
4,059
4,540
The right-of-use assets represents the discounted value of the contracted payments and receipt of landlord lease incentives under
the terms of the leases for the Liverpool, Edinburgh and London offices at the later of lease commencement, IFRS16 date of initial
application and the date of the lease modification. The lease payments have been discounted by a rate equivalent to the incremental
cost of borrowing. The right-of-use assets are being amortised over the remaining terms of the leases. The Edinburgh office lease
expires on 18 March 2022 and the rent is fixed up until that point. New leases over the London offices were signed on 8 August 2019
for a term of 10 years out to 31 January 2030, with a tenants break option on 1 February 2025. The rent is fixed up to 1 February 2025.
The Company has taken advantage of the low value asset exemption with respect to the lease of car parking spaces at the Edinburgh
Offices. Having reviewed the impact of COVID-19 on the business, the Directors do not consider there to have been an impairment of
the right-to-use assets at 31 December 2020. Further details relating to the lease liability can be found in note 19.
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13. Intangible asset
At 31 December 2018
Additions
At 31 December 2019
Additions
At 31 December 2020
Amortisation
At 31 December 2018
Amortisation
At 31 December 2019
Amortisation
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Total
£ 000's
100
-
100
-
100
-
(33)
(33)
(34)
(67)
33
67
Acquisition of client list
On 11 December 2018, Cenkos completed the acquisition of the Nominated Adviser and Corporate Broker client list of Smith &
Williamson. Under the terms of the agreement, Cenkos agreed to pay Smith & Williamson deferred consideration equal to 20% of all
corporate finance fees earned during the 12 months following completion from existing clients transferring to Cenkos. The estimated
amount of this consideration is included as an intangible asset and within accruals under current liabilities. Following initial
recognition, intangible assets are recognised at cost less any accumulated amortisation and accumulated impairment losses.
Amortisation is provided at rates calculated to write off the cost over its estimated useful life of three years. No impairment has been
recognised during the year.
14. Investment in subsidiaries
Cost
At 31 December
Shares in subsidiary
undertakings
2020
£ 000's
2019
£ 000's
1
1
The Company has investments in the following subsidiary undertakings, consisting solely of ordinary shares, of:
Direct holdings
Cenkos Nominee UK Limited
Cenkos Securities (Trustees) Limited
Cenkos Fund Management Limited
Tokenhouse Limited
Tokenhouse Stockbrokers Limited
Tokenhouse Yard Securities Limited
Tokenhouse Partners Limited
THY Securities Limited
Principal activity
Nominee company
Nominee company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Proportion of ordinary shares
and voting rights held
100%
100%
98%
100%
100%
100%
100%
100%
All of these subsidiary undertakings are registered in England. The registered address for all subsidiaries is 6.7.8. Tokenhouse Yard,
London EC2R 7AS. In the opinion of the Directors, the value of the investments is not less than the amount at which they are stated
in the Company's statement of financial position.
The assets and liabilities of the Cenkos Securities Employee Benefit Trust ("EBT"), the Deferred Bonus Scheme Employee Benefit Trust
and the Cenkos Securities plc Share Incentive Plan Trust ("SIP") excluding the Partnership and Dividend shares (see note 23) are
included in the Company Statement of Financial Position.
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15. Trade and other receivables
Current assets
Financial assets
Market and client receivables
Accrued income
Contract assets
Other receivables
Non-financial assets
Corporation tax receivable
Prepayments and other assets
2020
£ 000's
2019
£ 000's
11,478
196
178
639
12,491
-
502
12,993
11,225
279
316
598
12,418
98
939
13,455
As at 31 December, the ageing analysis of financial assets is, as follows:
31 December 2020
31 December 2019
Days past due
Total
£ 000's
12,491
12,418
Not past
due
£ 000's
10,809
9,760
< 30 days
£ 000's
1,281
1,573
30-60 days
£ 000's
236
729
61-90 days
£ 000's
112
56
> 91 days
£ 000's
53
300
The average credit period taken is 19 days (2019: 29 days). The Company has recognised expected credit losses amounting to £nil
(2019: -£0.2m) in accordance with the requirements of IFRS 9. The amount charged/(credited) to the income statement for
impairment is £nil (2019: -£0.2m).
The Directors consider that the carrying amount of trade and other receivables approximates their fair value. Having reviewed the
impact of COVID-19 on the business, the Directors have not changed their assessment of credit risk and consequently their credit risk
policy or approach.
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs
by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional. Contract assets include retainer fee income accrued for ongoing advice
to clients.
Credit risk
The Company’s principal financial assets are cash at bank (see note 18), trade and other receivables and investments. The Company’s
credit risk is primarily attributable to its cash at bank and trade and other receivables. Trade and other receivables include amounts
due from Cenkos’ corporate and investment trust clients for corporate finance advisory services and Nomad broking and research
retainer fees. The amounts presented in the statement of financial position are net of allowance for impairment. An allowance for
impairment is made where there is an expectation of credit losses over the remaining life of the exposure based on future expected
default rates. The Company has no significant concentration of credit risk, other than those disclosed in note 24. In addition, the risk
associated with financial assets is set out in note 24.
16. FVOCI investments
Current assets
Opening balance (at fair value)
Acquired during the year
Disposal of unlisted securities
Fair value loss through OCI
Closing balance (at fair value)
2020
£ 000's
2019
£ 000's
60
-
(25)
(35)
-
220
350
(464)
(46)
60
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FVOCI financial assets include unlisted equity shares received in lieu of fees. These are classified as Level 3 within the fair value
hierarchy. A number of valuation techniques have been used to provide a range of possible values for the FVOCI investments in
accordance with the International Private Equity and Venture Capital ("IPEV") valuation guidelines. The carrying values have been
adjusted to values within these ranges.
17. Other current financial assets and liabilities
Financial assets at FVTPL
Trading investments carried at fair value
Derivative financial assets - share options and warrants
Financial liabilities at FVTPL
Contractual obligation to acquire securities
2020
£ 000's
2019
£ 000's
4,305
1,007
5,312
8,406
567
8,973
(1,011)
(1,840)
Trading investments carried at fair value included above under financial assets at FVTPL and financial liabilities at FVTPL include long
positions and short positions (contractual obligations to acquire securities), respectively, in listed equity securities that present the
Company with the opportunity for return through dividend income and net trading gains. The fair values of these securities are based
on quoted market prices. Net trading gains from the financial assets and liabilities at FVTPL relate to market making activities and are
included under Execution - Net Trading Gains in the Income Statement. The management of risk resulting from these positions is
described in note 24.
Derivative financial assets include options over the shares of client companies taken in lieu of fees. See notes 1 and 2 (b) for an
explanation of how they have been treated in these financial statements.
Movements in net trading investments and FVOCI financial assets in cash flow
statement
Financial assets at FVTPL
Financial liabilities at FVTPL
FVOCI investments, net of tax
Shares and options received in lieu of fees
18. Cash and cash equivalents
Cash and cash equivalents
2020
£ 000's
3,661
(829)
24
11
2,867
2019
£ 000's
3,675
(4,178)
114
3,987
3,598
2020
£ 000's
32,735
2019
£ 000's
18,333
Cash at bank comprises cash held by the Company and instant access bank deposits. The carrying amount of these assets approximates
their fair value. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies (see note 24).
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19. Trade and other payables
Current liabilities
Financial liabilities
Trade creditors
Lease liabilities
Cash-settled deferred bonus scheme
Accruals
Other creditors
Non-financial liabilities
Contract liabilities
Corporation tax payable
Non-current liabilities
Financial liabilities
Lease liabilities
Cash-settled deferred bonus scheme
Lease liabilities on a discounted basis
At 1 January 2019: Initial recognition
Lease renewal
Accretion of interest
Rent prepaid and paid during the year net of Landlord incentives
At 31 December 2019
Accretion of interest
Rent prepaid and paid during the year
At 31 December 2020
Maturity analysis of lease liabilities on an undiscounted basis
Within one year
In the second to fifth years inclusive
After five years
At 31 December 2019
Within one year
In the second to fifth years inclusive
After five years
At 31 December 2020
The following are the amounts recognised in the income statement
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Charge for the year ended 31 December 2019
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Charge for the year ended 31 December 2020
2020
£ 000's
2019
£ 000's
9,404
584
145
12,962
391
23,486
549
485
1,034
24,520
4,927
159
5,086
Liverpool
£ 000's
9
-
-
(9)
-
-
-
-
Edinburgh
£ 000's
119
-
4
(42)
81
2
(42)
41
-
-
-
-
-
-
-
-
13
-
13
-
-
-
42
41
-
83
41
-
-
41
40
4
44
40
2
42
London
£ 000's
552
4,309
72
(62)
4,871
174
426
5,471
-
2,673
3,457
6,130
712
2,849
2,745
6,306
575
72
647
441
174
615
7,426
42
283
6,041
496
14,288
427
-
427
14,715
4,910
309
5,219
Total
£ 000's
680
4,309
76
(113)
4,952
176
384
5,512
42
2,714
3,457
6,213
753
2,849
2,745
6,347
628
76
704
481
176
657
The lease liabilities represent the discounted value of the contractual payments and receipt of landlord lease incentives under the
terms of the leases for the Liverpool, Edinburgh and London offices at the later of the beginning of the year or the date of the lease
modification. The lease payments are offset against this liability and interest charged on the outstanding balance at a rate equivalent
to the incremental cost of borrowing. For further details of the leases see note 12.
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20. Deferred tax
Deferred tax arises on all taxable and deductible temporary differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. The following are the deferred tax assets and liabilities
recognised by the Company and the movement thereon during the current and prior reporting year.
Deferred tax assets
At 31 December 2018
Origination and reversal of temporary differences credit / (expense)
At 31 December 2019
Origination and reversal of temporary differences expense
Deferred tax prior year adjustment
At 31 December 2020
Temporary differences
Property,
plant &
equipment
£ 000's
25
(37)
(12)
1
18
7
Share-based
payments
£ 000's
(121)
64
(57)
21
-
(36)
Total
£ 000's
520
(34)
486
223
18
727
Bonus
payments
£ 000's
616
(61)
555
201
-
756
The standard corporation tax in the UK was 19% throughout the reporting period. As announced in the Budget 2020, the corporation
tax rate for the fiscal years 2020 and 2021 will remain at 19%. This rate has been substantially enacted from 17 March 2020 and is
reflected in the valuation of the deferred tax balances.
The Company has unutilised capital losses on which a deferred tax asset has not been recognised as future utilisation of the losses is
dependent on future chargeable gains. The unrecognised deferred tax asset in respect of capital losses carried forward is gross
£302,261 (net £57,430 at 19%).
21. Share capital and capital redemption reserve
Authorised:
179,185,700 (2019 - 179,185,700) ordinary shares of 1p each
20,814,300 (2019 - 20,814,300) B shares of 1p each
Allotted:
56,694,783 (2019: 56,694,783) ordinary shares of 1p each fully paid
1 January 2019 to 31 December 2019
There were no shares issued or cancelled during the year.
1 January 2020 to 31 December 2020
There were no shares issued or cancelled during the year.
2020
£ 000's
2019
£ 000's
1,792
208
2,000
1,792
208
2,000
567
567
Capital redemption reserve
At 1 January
At 31 December
2020
Number
19,466,388
19,466,388
2019
Number
19,466,388
19,466,388
2020
£ 000's
195
195
2019
£ 000's
195
195
Nature and purpose of reserve
The capital redemption reserve was created to hold the nominal value of own shares purchased and cancelled by the Company.
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22. Own shares
Own shares represent the cost of shares purchased by the Company's Employee Benefit Trust ("EBT") and those transferred to the
Short-Term Incentive Plan (‘STIP’), deferred bonus scheme EBT and the Cenkos Securities plc Share Incentive Plan ("SIP").
The EBT was established by the Company in 2009. It is funded by the Company and has the authority to acquire Cenkos Securities plc
shares. The EBT is treated as an extension of the Company and therefore the shares held by the EBT are included under own shares
in equity.
2020
2019
Shares held by the EBT
At 1 January
Acquired during the year
Transferred from Treasury during the year
Transferred to the SIP
Free shares
Matching shares
Dividend re-investment
Transferred to the deferred bonus scheme and STIP EBT
At 31 December
Shares held in the deferred bonus scheme EBT
At 1 January
Transferred in from the EBT
Vesting shares transferred to employees
At 31 December
Shares held in the STIP
At 1 January
Transferred in from the EBT
At 31 December
Free and matching shares held by the SIP
At 1 January
Transferred in from the EBT
Free shares
Matching shares
Shares transferred to employees
At 31 December
Shares held in Treasury
At 1 January
Acquired during the year
Transferred to EBT during the year
Loss on shares transferred to EBT recognised in equity
At 31 December
At 31 December: Total own shares
Number
of shares
2,334,463
3,889,889
-
-
-
-
(3,200,000)
3,024,352
3,346,584
-
(1,210,602)
2,135,982
-
3,200,000
3,200,000
Cost
£ 000's
1,312
1,960
-
Number
of shares
777,474
2,297,246
1,384,748
-
-
-
(1,797)
1,475
-
-
-
(2,125,005)
2,334,463
2,958
-
(679)
2,279
-
1,797
1,797
2,037,632
2,125,005
(816,053)
3,346,584
-
-
-
Cost
£ 000's
710
1,277
942
-
-
-
(1,617)
1,312
2,085
1,617
(744)
2,958
-
-
-
1,116,437
1,166
1,357,527
1,386
-
-
(196,426)
920,011
-
-
-
-
-
9,280,345
-
-
(110)
1,056
-
-
-
-
-
6,607
-
-
(241,090)
1,116,437
1,384,748
-
(1,384,748)
-
-
6,797,484
-
-
(220)
1,166
1,482
-
(942)
(540)
-
5,436
23. Share-based payments
The Company has a Compensatory Award Plan 2009 ("CAP"), a Save-As-You-Earn ("SAYE") scheme, a Share Incentive Plan ("SIP") and
a Deferred Bonus Scheme ("DBS") for all qualifying employees of the Company.
Compensatory Award Plan 2009 ("CAP")
CAP options are exercisable at a price agreed in accordance with the rules of the scheme on the date of grant and vest immediately.
If the option remains unexercised after a period of 10 years from the date of grant, the options will expire. All options granted under
this scheme expired in November 2019. No further options were granted during the year.
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Save-As-You-Earn (“SAYE”) scheme
In May 2018, Cenkos launched a SAYE scheme. Under the scheme employees may elect to save up to £500 per month from their net
salary over three years. At the end of this period, employees have the option to acquire Cenkos ordinary shares at an exercise price
which was set at a 20% discount to the share price at the date of the launch of the scheme.
Details of the CAP and SAYE share options outstanding during the year are as follows.
2020
2019
Outstanding at beginning of year
Lapsed during the year
Issued during the year
Outstanding and exercisable at the end of the year
Number of
shares options
319,694
(280,883)
1,011,684
1,050,495
Options exercisable at £0.853 per share
Options exercisable at £0.4027 per share
Options in issue at the end of 31 December
Date of
Grant
May-18
Nov-20
Vesting
date
Jun-21
Jan-24
Date of Expiry
Nov-21
Jun-24
Weighted
average
exercise
price (in £)
0.85
0.85
0.40
0.42
Remaining
contractual
life, months
11
42
Number of
shares
options
9,415,742
(9,096,048)
-
319,694
2020
Number of
shares
options
38,811
1,011,684
1,050,495
Weighted
average
exercise
price (in £)
1.20
1.22
-
0.85
2019
Number of
shares
options
319,694
-
319,694
The options outstanding at 31 December 2020 have a weighted average remaining contractual life of 3.4 years (2019: 2.0 years). At
the date of grant, the options had an aggregate estimated fair value of £152,081 (2019: £69,374).
Share incentive plan (“SIP”)
In June 2014, Cenkos introduced a SIP scheme, whereby employees were invited to sacrifice up to £1,800 of earnings in order to
acquire Cenkos ordinary shares ("Partnership shares") to be held in trust. Shares acquired under this scheme were matched by Cenkos
on the basis of two "Matching shares" for everyone Partnership share held. In addition, employees were also offered the chance to
apply for "Free shares" to be held in trust. The SIP scheme was launched again for staff in December 2017 and completed on January
2018 on the same basis as previous schemes.
The table below gives details of the number of shares held within the scheme:
At 1 January
Contributions during the year
Partnership shares
Matching shares
Free shares
Dividend shares
Free and matching shares transferred to employees
Partnership and dividend shares transferred to employees
At 31 December
At 31 December
SIP shares allocated to individuals
Forfeited shares held by SIP
2020
Number
of shares
1,531,588
-
-
-
24,486
(196,426)
(91,042)
1,268,606
2019
Number
of shares
1,815,831
-
-
-
71,686
(241,090)
(114,839)
1,531,588
1,040,060
228,546
1,268,606
1,301,562
230,026
1,531,588
Deferred bonus scheme (“DBS”)
In April 2015, Cenkos introduced a Deferred Bonus Scheme (the "Scheme"), whereby a percentage of staff bonus awards was deferred
over a three-year period. The deferred element of any bonus award being released to the employee evenly split on each of the three
anniversaries of deferral into the Scheme. With respect to 2020, at the date of grant, where the deferral was held in Cenkos ordinary
shares in an EBT, the fair value of the deferral is charged to the Income Statement as a staff cost over the service period with the
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recognition of a corresponding credit to reserves. Where the deferral was held in cash, the fair value of the deferral is charged to the
Income Statement as a staff cost over the service period with the recognition of a corresponding credit as a liability.
Under the Scheme, £2.19m of 2020 bonus was deferred (2019: £0.44m), in aggregate £2.62m (2019: £1.78m) will be charged to the
P&L in future years over the life of the scheme.
2016, 2018 & 2019 Bonus deferral into cash
2020 Bonus deferral into cash
2016, 2017, 2018 & 2019 Bonus deferral into shares
2020 Bonus deferral into shares
2015 - 2020 Bonus deferral into shares
2015, 2016 & 2018 Bonus deferral into cash
2019 Bonus deferral into cash
2015, 2016, 2017 & 2018 Bonus deferral into shares
2019 Bonus deferral into shares
Shares held in the deferred bonus scheme EBT
At 1 January
Shares acquired during the year to settle prior year scheme awards
Vesting shares transferred to employees
At 31 December
Amount
brought
forward from
prior years
£ 000's
473
-
473
1,307
-
1,307
1,780
Amount
brought
forward from
prior years
£ 000's
512
-
512
1,770
-
1,770
2,282
2020
2019
Gross
bonus
deferred
£ 000's
-
26
26
-
2,162
2,162
2,188
Gross
bonus
deferred
£ 000's
-
298
298
-
145
145
443
Charge to
income
statement
£ 000's
220
9
229
409
711
1,120
1,349
Charge to
income
statement
£ 000's
239
98
337
559
49
608
945
2020
Number
of shares
3,346,584
-
(1,210,602)
2,135,982
Amount to be
charged in
future years
£ 000's
253
17
270
898
1,451
2,349
2,619
Amount to be
charged in
future years
£ 000's
273
200
473
1,211
96
1,307
1,780
2019
Number
of shares
2,037,632
2,125,005
(816,053)
3,346,584
Short Term Incentive Plan (“STIP”)
In April 2020, Cenkos introduced a Short-Term Incentive Plan (‘STIP’) as a one-off plan to retain and incentivise key members of staff.
Under the plan, share awards were made using shares already held in the EBT, which will vest on the first and second anniversaries
of grant. The fair value of the deferral is charged to the Income Statement as a staff cost over the service period with the recognition
of a corresponding credit to reserves.
Shares held in the STIP
At 1 January
Shares acquired during the year to settle scheme awards
At 31 December
2020
Number
of shares
-
3,200,000
3,200,000
2019
Number
of shares
-
-
-
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During the year, the Company recognised expenses of £2,165,890 (2019: £776,498) related to equity-settled share-based payment
transactions. These consist of a credit in respect of the SAYE scheme of £24,206 (2019: expense £7,519), expenses in respect of the
SIP schemes of £140,462 (2019: £160,690), the STIP scheme of £929,218 (2019: £nil) and the deferred bonus of scheme of £1,120,416
(2019: £608,289). In addition, the Company recognised expenses of £228,858 (2019: £337,381) related to cash-settled payment
transactions in respect of the deferred bonus scheme.
24. Financial instruments
Capital risk management
The Company manages capital to ensure that it will be able to continue as a going concern while aiming to maximise the return to
stakeholders. The capital structure of the Company consists of equity attributable to equity holders of the Company, comprising issued
capital, reserves and retained earnings as disclosed in the statement of changes in equity. At present the Company has no gearing and
it is the responsibility of the Board to review the Company’s gearing levels on an ongoing basis.
Externally imposed capital requirement
The Company is required to retain sufficient capital to satisfy the FCA capital requirements. These requirements vary from time to
time depending on the business conducted by the Company. The Company always retains a buffer above the FCA minimum
requirements and has complied with these requirements during and subsequent to the period under review.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in note 1 to the financial statements.
Financial risk management objectives
The Chief Executive Officer monitors and manages the financial risks relating to the operations of the Company through internal risk
reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including price risk), credit risk
and liquidity risk. Summaries of these reports are reviewed by the Board.
Compliance with policies and exposure limits is reviewed by the Chief Executive Officer and senior management on a continuous basis.
The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Interest rate risk management
The Company is exposed to interest rate risk because it has financial instruments on its statement of financial position which are at
both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and
floating rate instruments.
The Company’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity and interest rate risk
table section of this note.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative
instruments at the reporting date. For floating rate assets, the analysis is prepared based on the average rate due on the asset or
liability through the year. A 25 basis points increase or decrease is considered reasonable by senior management as it represents their
assessment of significant change in interest rates prompted by economic events.
If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s profit for the year
ended 31 December 2019 would increase/decrease by £0.03m (2019: increase/decrease by £0.05m). This is attributable to the
Company’s exposure to interest rates on its variable rate instruments.
Market risk (including equity price risks)
The Company is exposed to market risk arising from short-term positions in market making stocks in predominantly AIM quoted
companies. The Company has a low market risk appetite and manages this risk by establishing individual stock position limits and
overall trading book limits. It is exposed to equity price risk arising from these equity investments, which present the Company with
opportunity for return through dividend income and net trading gains.
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Equity price sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to equity price risks at the reporting date and, in the
opinion of senior management, a material movement in equity prices. This is based on the largest fall in the All Share AIM index in
one day and over a two week period. These parameters are also considered in the Company’s ILAA.
If equity prices had been 25% higher/lower, net profit for the year ended 31 December 2020 would have been £1.08m higher/lower
(2019: £1.80m higher/lower) due to change in the value of FVTPL held for trading investments.
The Company’s exposure to equity price risk is closely managed. The Company has built a framework of overall and individual stock
limits and these along with Value at Risk metrics are actively monitored by senior management on a daily basis. This framework also
limits the concentration of risks. The Company’s overall exposure to equity price risk is set by the Board.
Foreign currency risk
The Company has limited exposure to foreign currency risk arising from short-term positions in market making stocks and cash
balances denominated in US Dollars and Euros. The Company has a low appetite for foreign currency risk and manages this risk by
establishing individual stock position limits and maintaining sufficient foreign currency only to cover its immediate needs and those
of its clients.
Foreign currency risk sensitivity analysis
If foreign exchange rates had been 25% higher/lower, net profit for the year ended 31 December 2020 would have been £0.23m
higher/lower (2019: immaterial) due to change in the value of FVTPL held for trading foreign currency denominated investments and
cash balances. A 25% movement in currency rates is considered reasonable by senior management as it represents their assessment
of significant change in foreign exchange rates prompted by economic events.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.
These parties may default on their obligations due to the bankruptcy, lack of liquidity, operational failure and other reasons. The
exposure of the Company to its counterparties is closely monitored and the limits set to minimise the concentration of risks. An
allowance for impairment is made where there is an expectation of credit losses over the remaining life of the exposure.
The majority of the Company’s credit risk arises from the settlement of security transactions. However, the settlement model primarily
used by the Company does not expose the Company to counterparty risk as a principal to a trade. Rather, the Company’s exposure
lies solely with Pershing Securities Limited (“Pershing”), a wholly owned subsidiary of the Bank of New York Mellon Corporation, a AA-
(2019: AA-) rated bank. In addition, in circumstances in which the Company does act as principal when acting as a market maker, the
counterparty will normally be an FCA regulated market counterparty rather than a corporate or individual trader. The Company does
not have any significant credit risk exposure to any single counterparty with the exception of Pershing.
Cash resources also give rise to potential credit risk. The Company’s cash balances are held with HSBC Bank plc (an AA- rated bank),
Royal Bank of Scotland plc (an A+ rated bank) and Barclays Bank plc (an A+ rated bank). The banks with which the Company deposits
money are reviewed at least annually by the Board and are required to have at least an investment grade credit rating. To limit the
concentration risk in relation to cash deposits, the maximum amount which may be deposited with any one financial institution is set
at no more than 100% of the Company’s regulatory capital.
Trade receivables not related to the settlement of market transactions consist almost entirely of outstanding corporate finance fees
and retainers and are spread across a wide range of industries. Contract assets consist almost entirely of accrued corporate finance
fees and retainers and are spread across a wide range of industries. All new corporate finance clients are subject to a review by the
New Business Committee. This Committee considers, amongst other issues, the financial soundness of any client taken on.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the
Company’s maximum exposure to credit risk without taking account of the value of any collateral obtained. Having reviewed the
impact of COVID-19 on the business, the Directors have not changed their assessment of credit risk and consequently their credit risk
policy or approach.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit
rating agencies.
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The table below summarises the Company’s exposure to credit risk by asset class and credit rating. All assets within each class are
uncollateralised.
Exposure to credit risk
Derivative financial assets - share options and warrants
Market and client receivables
Market and client receivables
Market and client receivables
Market and client receivables
Market and client receivables
Market and client receivables
Accrued income
Contract assets
Other receivables
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Unrated
Unrated
AA
AA-
A+
A
BBB+
Unrated
Unrated
Unrated
AA-
A+
A
2020
£ 000's
1,007
9,270
-
1,808
154
-
246
196
178
639
21,620
11,115
-
46,233
2019
£ 000's
567
7,704
-
3,339
27
155
-
279
316
598
-
13,058
5,275
31,318
The expected credit losses in relation to the above credit exposures amount to £ nil (2019: £0.07m).
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board. It has, however, delegated day-to-day management to the
Chief Executive Officer. The Company has in place an appropriate liquidity risk management framework for the management of its
short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining
adequate reserves, banking facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles
of financial assets and liabilities. Given the nature of the Company’s business, it does not run any material liquidity mismatches,
financial liabilities are on the whole short-term and the Company has sufficient liquid assets to cover all of these liabilities.
Liquidity and interest risk tables
The following tables detail the Company’s remaining contractual maturity for its non-derivative financial assets and liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Company is required to pay. The table includes both interest and principal cash flows. The tables also detail the Company’s expected
maturity for its non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual
maturities of the financial assets including interest that will be earned on those assets. No maturity date has been listed where there
is no contractual maturity for the financial assets.
Weighted
average
effective
interest rate
NIB
NIB
NIB, FIRI
NIB
NIB
VIRI(0%)
No
Maturity
Date
£ 000's
-
4,305
-
-
-
-
4,305
Within
1 year
£ 000's
-
-
12,491
(1,011)
(23,486)
32,735
20,729
Within
5 years
£ 000's
-
1,007
-
-
(3,008)
-
(2,001)
After
5 years
£ 000's
-
-
-
-
(2,745)
-
(2,745)
Total
£ 000's
-
5,312
12,491
(1,011)
(29,239)
32,735
20,288
31 December 2020
FVOCI financial assets
Financial assets at FVTPL
Trade and other receivables
Financial liabilities at FVTPL
Trade and other payables
Cash at bank
NIB - Non-interest bearing
VIRI - Variable interest rate instruments
FIRI - Fixed interest rate instruments
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31 December 2019
FVOCI financial assets
Financial assets at FVTPL
Trade and other receivables
Financial liabilities at FVTPL
Trade and other payables
Cash at bank
Cash at bank
Cash at bank
Weighted
No
average Maturity
effective
Date
£ 000's
interest rate
NIB
60
8,406
NIB
-
NIB, FIRI
-
NIB
-
NIB
-
VIRI(0.30%)
-
VIRI(0.50%)
-
VIRI(0.30%)
8,406
Within
1 year
£ 000's
-
-
12,418
(1,840)
(14,288)
5,275
9,230
3,828
14,623
Within
5 years
£ 000's
-
567
-
-
(3,023)
-
-
-
(2,456)
After
5 years
£ 000's
-
-
-
-
(3,457)
-
-
-
(3,457)
Total
£ 000's
60
8,973
12,418
(1,840)
(20,768)
5,275
9,230
3,828
17,116
The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate
their fair values.
Fair value hierarchy
All financial instruments carried at fair value are placed in three categories, defined as follows:
Level 1 – Quoted market prices
Level 2 – Valuation techniques (market observable)
Level 3 – Valuation techniques (non-market observable)
The Company held the following financial instruments measured at fair value:
FVOCI financial assets
Financial assets at FVTPL:
Market and client receivables
Derivative financial assets - share options and warrants
Non-derivative financial assets held for trading
Financial liabilities at FVTPL:
Contractual obligation to acquire securities
FVOCI financial assets
Financial assets at FVTPL:
Market and client receivables
Derivative financial assets - share options and warrants
Non-derivative financial assets held for trading
Financial liabilities at FVTPL:
Contractual obligation to acquire securities
Level 1
£ 000's
-
11,478
-
4,305
15,783
1,011
Level 1
£ 000's
-
11,225
-
8,305
19,530
1,840
2020
Level 2
£ 000's
-
-
-
-
-
-
Level 3
£ 000's
-
-
1,007
-
1,007
Total
£ 000's
-
11,478
1,007
4,305
16,790
-
1,011
2019
Level 2
£ 000's
-
Level 3
£ 000's
60
-
567
101
668
-
-
-
-
-
Total
£ 000's
60
11,225
567
8,406
20,198
-
1,840
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lower level input that is
significant to the fair value measurement as a whole) at the end of the reporting period.
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Reconciliation of recurring fair value measurements categorised within Level 3 of the fair value hierarchy
Opening balance 1 January 2020
Disposal of unlisted securities
Change in fair value recognised in Comprehensive income
Shares transferred from level 3 following the re-admission of
shares to trading
Exercise of warrants
Unlisted warrants received in lieu of fees
Fair value gain
Closing balance 31 December 2020
Opening balance 1 January 2019
Disposal of unlisted securities
Change in fair value recognised in Comprehensive income
Shares transferred from level 1 following the suspension of
trading
Unlisted shares, options and warrants received in lieu of fees
Fair value loss
Closing balance 31 December 2019
Convertible
Loan
£ 000's
-
-
-
Unlisted
securities
at FVTPL
£ 000's
101
-
-
Unlisted
securities
at FVOCI
£ 000's
60
(25)
(35)
Share
options and
warrants
£ 000's
567
-
-
-
-
-
-
-
(101)
-
-
-
-
-
-
-
-
-
-
(294)
181
553
1,007
Convertible
Loan
£ 000's
-
-
-
Unlisted
securities
at FVTPL
£ 000's
-
-
-
Unlisted
securities
at FVOCI
£ 000's
220
(464)
(46)
Share
options and
warrants
£ 000's
975
-
-
-
61
(61)
-
101
-
-
101
-
350
-
60
-
163
(571)
567
Total
£ 000's
728
(25)
(35)
(101)
(294)
181
553
1,007
Total
£ 000's
1,195
(464)
(46)
101
574
(632)
728
Level 3 financial instruments consist of derivative financial assets and shares with no quoted market price.
The unlisted equity shares are classified as Level 3 within the fair value hierarchy. A number of valuation techniques have been used
to provide a range of possible values for the investments in accordance with the International Private Equity and Venture Capital
(“IPEV”) valuation guidelines. The carrying values have been adjusted to values within these ranges. There have been no other factors
brought to the Board’s attention which would suggest that there has been a further fall in fair value which has not been recognised
in these financial statements.
The derivative financial assets are carried as financial assets at FVTPL classified as Level 3 within the fair value hierarchy and comprise
equity options and warrants over listed securities.
Impact of reasonably possible alternative assumptions
The significant unobservable input used in the fair value measurement of Cenkos’ holdings of share options and warrants is the
volatility measure. Significant increases/decreases in the volatility measure would result in a significantly higher/lower fair value
measurement.
A sensitivity analysis based on a 25% increase/decrease in the volatility measure used as an input in the valuation of the share options
and warrants shows the impact of such a movement would be an increase of £0.33m or a decrease of £0.34m respectively to the
profit in the income statement.
Determination of fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Financial instruments measured at fair value on an ongoing basis include trading assets and liabilities and financial investments
classified as FVOCI.
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Financial instruments are valued using models where one or more significant inputs are not observable. The best evidence of fair
value is a quoted price in an actively traded market. In the event that the market for a financial instrument is not active, a valuation
technique is used. The majority of valuation techniques employ only observable market data and so the reliability of the fair value
measurement is high. However, certain financial instruments are valued on the basis of valuation techniques that feature one or more
significant market inputs that are “non-observable”. For these instruments, the fair value derived is more judgemental. “Non-
observable” in this context means that there are few or no current market data available from which to determine the level at which
an arm’s length transaction would be likely to occur. It generally does not mean that there is absolutely no market data available upon
which to base a determination of fair value (historical data may, for example, be used). Furthermore, the assessment of hierarchy
level is based on the lowest level of input that is significant to the fair value of the financial instrument.
The valuation models used where quoted market prices are not available incorporate certain assumptions that the Company
anticipates would be used by a third-party market participant to establish fair value.
Share options and warrants
1,007 Monte Carlo simulation
Fair value at 31
December 20
Valuation Technique
Unobservable input
Volatility
Range
43-76%
25. Related party transactions
Transactions with related parties are made at arm's length. There were no outstanding balances with related parties at the year-end
(2019: none). There have been no guarantees provided or received for any related party receivables or payables. The Board includes
those employees considered to be key management personnel. The compensation of the key management personnel of the Company
(including the Directors) and their interests in the shares and options over the shares of Cenkos Securities plc were as follows:
Aggregate emoluments
2020
£ 000's
1,556
2019
£ 000's
1,055
To comply with the Pensions Act, all qualifying employees are enrolled in a pension scheme. Under the scheme, qualifying employees
are required to contribute a percentage of their relevant earnings. The Company also contributes 3% (2019: 3%) of relevant earnings.
During the year ended 31 December 2020, Cenkos paid £833 (2019: £nil) into this scheme in respect of the Directors.
Related party interests in ordinary shares of Cenkos Securities plc
Number of shares
Percentage interest
2020
No.
6,548,421
12%
2019
No.
5,137,218
9%
No. of shares held
2020
No.
18,842
586,000
222,808
2019
No.
nil
nil
nil
No. of shares held
subject to forfeiture
conditions
2020
No.
6,594
586,000
222,808
2019
No.
nil
nil
nil
Exercise
price
£0.85
£0.40
Grant
date
14/05/2018
17/11/2020
Earliest
exercise
date
01/06/2021
01/01/2024
Latest
exercise
date
30/11/2021
30/06/2024
2020
No.
-
44,698
2019
No.
21,094
nil
Related party interests in SIP
Related party interests in STIP
Related party interests in DBS
Related party interests in share options
SAYE Scheme
SAYE Scheme
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26. Standards issued but not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective
in future accounting periods that the group has decided not to adopt early. The following amendments are effective for the period
beginning 1 January 2022:
◼ Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
◼ Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
◼ Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
◼ References to Conceptual Framework (Amendments to IFRS 3).
It is not expected that the amendments listed above, once adopted, will have a material impact on the financial statements.
27. Events after the reporting period
There were no material events to report on that occurred between 31 December 2020 and the date at which the Directors signed the
Annual Report.
28. Contingent liabilities
From time to time the Company may become subject to various litigation, regulatory or employment related claims. The Directors
have considered any current matters pending against the Company. Based on the evidence available, the facts and circumstances and
insurance cover available, the Board has concluded that the outcome of these will be resolved with no material impact on the
Company’s financial position or results of operations.
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Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Cenkos Securities plc (the “Company”) will be held at 6.7.8 Tokenhouse
Yard, London EC2R 7AS on 12 May 2021 at 9.30 am (the “Meeting”) for the transaction of the following business:
To consider and, if thought fit, to pass the following Resolutions, each of which will be proposed as an ordinary resolution,
save for Resolutions 10 and 11 which will be proposed as special resolutions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
That the Company’s Annual Accounts for the year ended 31 December 2020, together with the Directors’ Report and the
Auditor’s Report on those accounts, be received.
That the final dividend recommended by the Directors of 2.5p per ordinary share for the year ended 31 December 2020 be
declared payable on 17 June 2021 to the holders of ordinary shares registered at the close of business on 14 May 2021.
That Andrew Boorman be re-elected as a Director of the Company.
That Jeremy Miller be re-elected as a Director of the Company.
That Julian Morse be re-elected as a Director of the Company.
That Lisa Gordon be elected as a Director of the Company.
That BDO LLP be appointed as auditor to the Company until the conclusion of the next Annual General Meeting of the Company.
That the Directors be authorised to fix the auditor’s remuneration.
That the Directors be generally and unconditionally authorised pursuant to and in accordance with section 551 of the
Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot shares in the Company and grant rights to
subscribe for or to convert any security into shares in the Company:
9.1 up to a nominal amount of £188,982.00; and
9.2 comprising equity securities (as defined in section 560(1) of the Act) up to an aggregate nominal amount of £188,982.00
in connection with an offer by way of a rights issue to:
(i) ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
(ii) holders of other equity securities as required by the rights of those securities or, subject to such rights as the
Directors otherwise consider necessary,
and so that the Directors may impose any limits or restrictions and make any arrangements which they consider necessary
or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems
in, or under the laws of, any territory or any other matter.
The authorities conferred on the Directors to allot securities under paragraphs 9.1 and 9.2 will expire at the conclusion of the
Annual General Meeting of the Company to be held in 2022 or, if earlier, at 6.00pm on 12 August 2022 (unless previously
renewed, varied or revoked by the Company at a general meeting). The Company may before these authorities expire, make
an offer or enter into an agreement which would or might require such securities to be allotted after such expiry and the
Directors may allot such securities in pursuance of that offer or agreement as if the power conferred by this resolution had not
expired.
10.
That, subject to the passing of Resolution 9 set out in the Notice convening the Meeting, the Directors be and are empowered
in accordance with section 570 of the Companies Act 2006 (the “Act”) to allot equity securities (as defined in section 560 of
the Act) for cash, pursuant to the authority conferred on them to allot such shares or grant such rights by that Resolution
and/or where the allotment constitutes an allotment of equity securities by virtue of section 560(3) of the Act , as if section
561 (1) and sub-sections (1) – (6) of section 562 of the Act did not apply to any such allotment, provided that the power
conferred by this Resolution shall be limited to:
10.1
the allotment of equity securities in connection with an offer of, or invitation to apply for, equity securities (but in the
case of the authority granted under Resolution 9.2 by way of a rights issue only) to (i) ordinary shareholders in
proportion (as nearly as may be practicable) to their existing holdings; and (ii) holders of other equity securities as
required by the rights of those securities, or subject to such rights as the Directors otherwise consider necessary, in each
case subject only to such limits, restrictions or other arrangements as the Directors may consider necessary or
appropriate to deal with treasury shares, fractional entitlements, record dates or legal, regulatory or practical problems
under the laws or requirements of any recognised regulatory body or stock exchange in any territory; and
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10.2
the allotment of equity securities for cash (otherwise than pursuant to sub-paragraph 10.1 above) up to an aggregate
nominal value not exceeding £28,347.00,
and these authorities shall, unless renewed, varied or revoked by the Company in general meeting, expire at the
conclusion of the Annual General Meeting of the Company to be held in 2022 or, if earlier, at 6.00pm on 12 August
2022, but shall extend to the making, before such expiry of an offer or agreement that would or might require equity
securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or
agreement as if the authority conferred hereby had not expired.
11.
That the Company be and is hereby generally and unconditionally authorised for the purpose of section 701 of the Companies
Act 2006 (the “Act”) to make market purchases (as defined in section 693 of the Act) of ordinary shares of 1 penny each in the
capital of the Company (“ordinary shares”) provided that:
11.1
11.2
11.3
11.4
11.5
the maximum number of ordinary shares hereby authorised to be purchased is 5,663,808;
the minimum price (exclusive of expenses) that may be paid for such ordinary shares is 1 penny per ordinary share,
being the nominal amount thereof;
the maximum price (exclusive of expenses) that may be paid for such ordinary shares shall be an amount equal to the
higher of (i) 5% above the average of the middle market quotations for such shares taken from the AIM appendix to The
London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the
purchase is made and (ii) the higher of the price of the last independent trade of an ordinary share and the highest
current independent bid for an ordinary share as derived from the trading venue where the purchase is carried out;
the authority hereby conferred shall (unless previously renewed or revoked) expire on the earlier of the end of the next
Annual General Meeting of the Company and the date which is 18 months after the date on which this Resolution is
passed; and
the Company may make a contract to purchase its own ordinary shares under the authority conferred by this Resolution
prior to the expiry of such authority, and such contract will or may be executed wholly or partly after the expiry of such
authority, and the Company may make a purchase of its own ordinary shares in pursuance of any such contract.
By order of the Board
Stephen Doherty
Company Secretary
19 March 2021
Registered office:
6.7.8 Tokenhouse Yard London
EC2R 7AS
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Notes in respect of Coronavirus and the Annual General Meeting
We are closely monitoring the UK Government’s guidance in respect of the removal of the lockdown restrictions. The Board takes its
responsibility to safeguard the health of its all its stakeholders including shareholders and employees very seriously and so the
following measures will be put in place for the AGM.
The format of the AGM will be kept under review in line with official guidance. However, it will likely only be attended by the minimum
number of Directors of the Company required to ensure that the legal requirements to hold the AGM can be satisfied and other
shareholders will not be permitted to attend. It is likely that the format of the meeting will be simply to propose and vote on the
resolutions set out in the Notice and it will end immediately following the formal business of the AGM.
At the date of printing this Notice, the UK Government's guidance on restricting social gatherings remains in place. If such guidance
remains in place on the date of the AGM, then shareholders will be prohibited from attending the AGM. The Board is, therefore,
encouraging shareholders to appoint the Chair of the AGM as their proxy (either electronically or by post) with their voting
instructions. Appointing the Chair of the AGM as your proxy is the only way to ensure your vote is exercised at the AGM as, depending
on the guidance, other proxies may not be granted access to the AGM.
In line with corporate governance best practice, and in order that the proxy votes of shareholders are fully reflected in the voting on
the resolutions, the Chair of the AGM will direct that voting on all resolutions set out in the Notice of AGM will take place by way of a
poll.
If by the time of the AGM the UK Government's restrictions on social gatherings have been removed, shareholders are reminded that
if they still wish to attend the AGM in person they should not do so if they or someone living in the same household feels unwell or
has been in contact with anyone who has the virus or who feels unwell. The Board may need to put in place arrangements to protect
attendees from any risk to their health and may refuse entry to persons who do not comply with such arrangements.
We are, as always, committed to engagement with our shareholders. If you have questions which you would like to discuss in advance
of the AGM, please contact the Company Secretary by email on Secretariat@Cenkos.com or send it in writing with your Form of Proxy
to the Registrar, to arrive no later than two days in advance of the AGM. The Company Secretary will pass your questions on to the
appropriate person at the Company who will endeavour to respond as soon as practicable. Responses will either be made by return
email or published on our investors' website at www.Cenkos.com/investors, as deemed appropriate by the Board.
The Company will continue to monitor the impact of COVID-19. If any changes are made to the holding of the AGM these will be
detailed on the Company’s website and announced via RIS. Shareholders should visit https://www.Cenkos.com/investors/agm for
the latest updates.
Notes in respect of casting proxy votes
◼ A member entitled to attend and vote at the Meeting convened by the above Notice is entitled to appoint one or more proxies to
exercise all or any of the rights of the member to attend and speak and vote in his/her place. A proxy need not be a member of
the Company.
◼ A member may appoint more than one proxy in relation to the Meeting, provided that each proxy is appointed to exercise the
rights attached to a different share or shares held by that member. However, given the likely restrictions on attendance,
shareholders are strongly advised to appoint the Chair of the AGM as their proxy rather than a named person who may not be
permitted to attend the meeting.
◼ To appoint a proxy you may use the Form of Proxy enclosed with this Notice. To be valid, the Form of Proxy, together with the
power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of the same, must be
deposited by 9.30 am on 10 May 2021 (being not less than 48 hours before the Meeting, not including any part of a day that is not
a working day), or in the event of any adjournment not less than 48 hours (excluding any part of a day that is not a business day)
before the time appointed for holding the adjourned meeting, at the offices of the Company’s registrars, Link Group, 10th Floor,
Central Square, 29 Wellington Street, Leeds, LS1 4DL PXS1. Completion of the Form of Proxy will not prevent you from attending
and voting in person, should this be permitted under applicable COVID-19 restrictions.
◼ CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for
the Meeting and any adjournment(s) thereof by utilising the procedures described in the CREST manual. CREST personal members
or other CREST-sponsored members and those CREST members who have appointed a voting service provider(s), should refer to
their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
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Cenkos Securities plc Annual Report 2020
◼
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in accordance with Euroclear UK and Ireland’s specifications and must contain the
information required for such instructions, as described in the CREST manual. The message must be transmitted so as to be
received by the issuer’s agent (ID RA10), by the latest time for receipt of proxy appointments specified in this Notice. For this
purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST
Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by
CREST. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK and
Ireland does not make available special procedures in CREST for any particular messages. Normal system timings and limitations
will therefore apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored
member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to
those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) of the Uncertificated
Securities Regulations 2001 (as amended).
Appointment of a proxy through CREST will not prevent a member from attending and voting in person, should this be permitted
under applicable COVID-19 restrictions.
◼ To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the votes they may
cast), shareholders must be registered in the register of members of the Company by close of business on 10 May 2021 (or, in the
event of any adjournment on the date which is two days before the time of the adjourned Meeting, excluding non-business days).
Changes to the register of members after the relevant times shall be disregarded in determining the rights of any person to attend
and vote at the Meeting.
◼
In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to
the exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by the order in which the
names stand in the register of members of the Company in respect of the relevant joint holding.
◼ As at 19 March 2021 (being the last business day prior to publication of the Notice), the Company’s issued share capital consists
of 56,694,783 ordinary shares of one penny each, carrying one vote each. Therefore, the total voting rights in the Company as at
19 March 2021 are 56,694,783.
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Cenkos Securities plc Annual Report 2020
Explanatory notes to the notice of Annual General Meeting
Resolution 1
Company’s Annual Report and Accounts 2020 (ordinary resolution)
Company law requires the Directors to present to the Annual General Meeting the Annual Accounts, the Directors’ Report and the
Auditor’s Report on those accounts.
Resolution 2
Final dividend (ordinary resolution)
The payment of a final dividend of 2.5p per ordinary share in respect of the year ended 31 December 2020, which is recommended
by the Board, requires the approval of the shareholders at the Annual General Meeting.
Resolution 3 to 6
Re-election and election of Directors (ordinary resolutions)
The Articles require that all serving Directors should submit themselves for re-election and election each year. At the Annual General
Meeting, Andrew Boorman, Jeremy Miller and Julian Morse will retire and submit themselves for re-election and Lisa Gordon, who
was appointed since the last AGM, will submit herself for election. Resolutions 3 to 6 propose their re-elections and elections.
The Directors believe that the Board continues to maintain an appropriate balance of knowledge and skills and that all the Non-
executive Directors are independent in character and judgement. Biographical details of all our Directors seeking re-election or
election can be found on page 29 and 30 of the 2020 Annual Report.
Resolutions 7 and 8
Appointment of auditor and determination of their remuneration (ordinary resolutions)
As was explained in the 2020 Annual Report, the Audit, Risk and Compliance Committee undertook a tender process for the Company’s
external audit services during 2020. Following that process, the Audit, Risk and Compliance Committee recommended to the Board
that BDO LLP be appointed as the Company’s Auditor for the financial year ended 31 December 2020.
Resolution 7 proposes the appointment of BDO LLP as the Company’s Auditor and Resolution 8 authorises the Directors, in accordance
with standard practice, to negotiate and agree the remuneration of the Auditors. In practice, the Audit, Risk and Compliance
Committee will consider the audit fees for recommendation to the Board.
Resolution 9
Authority to allot shares (ordinary resolution)
Resolution 9 asks shareholders to grant the Directors authority under section 551 of the Companies Act 2006 (the “Act”) to allot shares
or grant subscription or conversion rights as are contemplated by section 551 (a) and (b) of the Act respectively up to a maximum
aggregate nominal value of £377,964, being approximately 66% of the nominal value of the issued share capital of the Company as at
19 March 2021 (being the latest practicable date prior to the publication of this document), £188,982 of this authority is reserved for
a fully pre-emptive rights issue. This is the maximum permitted amount under best practice corporate governance guidelines. The
authority will expire at the end of the Annual General Meeting of the Company in 2022 or, if earlier, on 12 August 2022. The Directors
have no present intention of exercising such authority. The Resolution replaces a similar resolution passed at the Annual General
Meeting held in 2020.
Resolution 10
Disapplication of pre-emption rights (special resolution)
If the Directors wish to allot new shares or other equity securities for cash or sell any shares which the Company holds in treasury
following a purchase of its own shares pursuant to the authority in Resolution 11 below (or otherwise), the Act requires that such
shares or other equity securities are offered first to existing shareholders in proportion to their existing holding. Resolution 10 asks
shareholders to grant the Directors authority to allot equity securities for cash up to an aggregate nominal value of £28,347 (being
approximately 5% of the Company’s issued share capital as at 19 March 2021) without first offering the securities to existing
shareholders. The Resolution also disapplies the statutory pre- emption provisions in connection with a rights issue, but only in relation
to the amount permitted under Resolution 9.2, and allows the Directors, in the case of a rights issue, to make appropriate
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Cenkos Securities plc Annual Report 2020
arrangements in relation to treasury shares, fractional entitlements, record dates or other legal, regulatory or practical problems
which might arise. In accordance with the Pre-Emption Group's Statement of Principles, the Directors confirm that they do not intend
to issue shares for cash representing more than 7.5 per cent. of the Company's issued ordinary share capital in any rolling three-year
period without prior consultation with shareholders. The authority will expire at end of the Annual General Meeting of the Company
in 2022 or, if earlier, at 6.00pm on 12 August 2022. The Resolution replaces a similar resolution passed at the Annual General Meeting
of the Company held in 2020.
Resolution 11
Authority to purchase the Company’s own ordinary shares (special resolution)
Resolution 11 to be proposed at the Annual General Meeting seeks authority from shareholders for the Company to make market
purchases of its own ordinary shares, such authority being limited to the purchase of 9.99% of the ordinary shares of 1 penny each in
issue as at 19 March 2021. The maximum price payable for the purchase by the Company of its own ordinary shares will be limited to
the higher of 5% above the average of the middle market quotations of the Company’s ordinary shares, as derived from the AIM
Appendix to the Daily Official List of the London Stock Exchange, for the five business days prior to the purchase and the higher of the
price of the last independent trade of an ordinary share and the highest current independent bid for an ordinary share as derived
from the trading venue where the purchase is carried out.
The minimum price payable by the Company for the purchase of its own ordinary shares will be 1 penny per ordinary share (being the
nominal value of an ordinary share). The authority to purchase the Company’s own ordinary shares will only be exercised if the
Directors consider there is likely to be a beneficial impact on the earnings per ordinary share and that it is in the best interests of the
Company at the time. This Resolution renews a similar resolution passed at the Annual General Meeting held in 2020. The Company
is allowed to hold in treasury any shares purchased by it using its distributable profits. Such shares will remain in issue and will be
capable of being re-sold by the Company or used in connection with certain of its share schemes. The Company would consider, at
the relevant time, whether it was appropriate to take advantage of this ability to hold the purchased shares in treasury.
Options to subscribe for 1,050,498 ordinary shares have been granted and are outstanding as at 19 March 2021 (being the latest
practicable date prior to publication of this document) representing 1.85% of the issued ordinary share capital at that date. If the
Directors were to exercise in full the power for which they are seeking authority under Resolution 11, the options outstanding as at
19 March 2021 would represent 2.06% of the ordinary share capital in issue following such exercise.
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Cenkos Securities plc Annual Report 2020
Information for shareholders
Directors
Lisa Gordon
Andrew Boorman
Jeremy Miller
Jim Durkin
Julian Morse
(Non-executive Chairman)
(Non-executive Director)
(Non-executive Director)
(Chief Executive Officer)
(Executive Director)
Company Secretary
Stephen Doherty
Anticipated Financial Calendar
March
May
June
September
November
Year-end results announced
Annual General Meeting
Final dividend paid
Half-year results announced
Interim dividend paid
Company Registration Number 05210733, England
and Country of Incorporation
Registered Office
Banker
Solicitors
Auditors
Registrars
Nominated Adviser
Broker
6.7.8 Tokenhouse Yard
London EC2R 7AS
HSBC
Corporate Banking
60 Queen Victoria Street
London EC4N 4TR
Travers Smith LLP
10 Snow Hill
London EC1A 2AL
BDO LLP
55 Baker Street
London W1U 7EU
Link Asset Services
The Registry
10th Floor Central Square
29 Wellington Street
Leeds LS1 4DL
Spark Advisory Partners Limited
5 St John’s Lane
London EC1M 4BH
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Website
www.cenkos.com
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Cenkos Securities plc Annual Report 2020
Printed by DG3 using Revive 100 Silk which is a white triple coated sheet, manufactured from FSC® Recycled certified fibre
derived from 100% pre and post-consumer waste.
Cenkos Securities plc
LONDON
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Telephone: +44 (0)207 397 8900
EDINBURGH
3rd Floor
66 Hanover Street
Edinburgh
EH2 1EL
Telephone: +44 (0)131 220 6939
Email: info@cenkos.com
www.cenkos.com