22  March 2021

Cenkos Securities plc

Annual Results for the year ended 31 December 2020

Cenkos Securities plc (the "Company" or "Cenkos" or the "Firm"), the independent institutional stockbroking firm, today announces its results for the year ended 31 December 2020.

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

(1)      Underlying profit is profit before restructuring costs and charges related to the Cenkos Short-Term Incentive Plan and tax.

(2)      Prior year comparatives have been restated to conform with current interpretation of IAS 33 such that there is no adjustment for dividends on shares held in SIP & DBS in arriving at Earnings for the purpose of basic earnings per share.

(3)      Includes a proposed final dividend of 2.5p (2019: 1.0p)

Since being admitted to trading on AIM in 2006, the Company has returned £115.1 million of cash to shareholders, equivalent to 178.3p per share, before the payment of the proposed 2020 final dividend of 2.5p per share.

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.

The appointment of Lisa Gordon as Chairman, and of Julian Morse as Chief Executive Officer (subject to FCA approval) along with the wider changes to the senior management, including Jeremy Osler joining the Board as Executive Director (also subject to FCA approval), creates a strong leadership team to take the business forward.

Jim Durkin, Chief Executive Officer said: "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."

Julian Morse, Executive Director commented: "This is has been a strong year of growth for Cenkos, with revenue up by 23% and underlying profit by 188%, as the impact of changes made to our operations came through and companies looked to the equity markets for ready access to capital. During 2020, we raised £900m for our clients, completing 29 raisings including 4 IPOs. The momentum has carried through into 2021 with a healthy pipeline ahead."

Chairman's statement

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. 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.

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

Chief Executive Officer's statement

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.

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

Income statement

For the year ended 31 December 2020

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

Statement of comprehensive income

For the year ended 31 December 2020

Statement of financial position

As at 31 December 2020

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

Cash flow statement

For the year ended 31 December 2020

Statement of changes in equity

For the year ended 31 December 2020

                                                                                                                                                Equity attributable to equity holders

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). The financial information contained within this announcement does not constitute statutory accounts for the year ended 31 December 2020 within the meaning of Section 434 of the Companies Act 2006, but is derived from those audited accounts. The auditors reported on those accounts and their report was unqualified and did not contain any statement under section 498(2) or section 498(3) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2020 will be delivered to the Registrar of Companies in due course. The annual report and audited statutory accounts will be sent to shareholders and will be made available to the public on the Company's website: www.cenkos.com or, upon request, copies may be obtained from the Company Secretary at the registered office of Cenkos Securities plc, 6.7.8. Tokenhouse Yard, London, EC2R 7AS. The Company's Annual General Meeting will be held on 12 May 2021.

The financial information contained within these financial statements has been prepared on the historical cost

basis, except for the revaluation of certain financial instruments.

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 Annual Report.

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 Annual Report 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.

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.

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.

2. Dividends

Amounts recognised as distributions to equity holders in the year:

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. The final dividend will be paid on 17 June 2021 to the shareholders on the register at 14 May 2021, subject to approval at the Annual General Meeting to be held on 12 May 2021.

3. 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.

4. Market abuse regulation (MAR) disclosure

This announcement contains certain inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.