Broker Cenkos hit as Brexit knocks floats

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By Ben Martin

Stockbroker Cenkos Securities has emerged as a casualty of the Brexit vote with its revenues plunging and its profits almost wiped out after the uncertainty caused by the EU referendum hit stock market floats.

Shares in the Aim-listed broker dropped as much as 18.3pc to 94p after it posted a 71.1pc slump in first-half revenues to £15.3m and a 91.1pc drop in pre-tax profits to £1.7m. On an after-tax basis, it generated profits of just £653,000 in the six months to the end of June compared with £14.6m in the same period a year earlier.

The pay packages handed out to Cenkos’s bankers and brokers have been hit as a result, with its costs tumbling 60pc to £13.7m, a fall it said was “primarily due to lower performance-related pay”.

Its interim dividend has also been slashed to 1p-a-share from 7p a year earlier, hitting both shareholders and employees. The cut to the pay-out means only £120,000 will be distributed to staff in the second-half under a so-called phantom dividend plan, compared with £990,000 last year.

The EU vote led to a decline in stock market floats as companies, wary of the uncertainty caused by the June referendum, shied away from selling shares to investors and carrying out mergers and acquisitions. That has hurt smaller brokers, which vie with each other to manage initial public offerings and advise on other deals that generate big fees.

In addition, Cenkos has been hit by regulatory problems, which have cost it this year. The Financial Conduct Authority fined Cenkos £530,500 for historic failings in its handling of Quindell, an insurance outsourcer that has since become embroiled in scandal.

Jim Durkin, chief executive of Cenkos, said that there had been “very difficult market conditions which meant a number of significant fundraisings slipped into the second half of 2016”.

The broker raised £529m for clients in the first-half of the year, down from £2bn in 2015. Last year’s figures were swelled by Cenkos’s work on the float of used cars giant BCA Marketplace, a transaction that brought in £26.7m of revenues alone for the broker.

Cenkos will be hoping that another bout of market volatility does not scupper the deals it has lined up for the coming months, which include the £97.3m spin-off Sportech’s Football Pools business.

 

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