Cenkos shares dive after small cap fundraising dries up

Jessica Morris
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Inside The London Stock Exchange
Companies aimed away from London's junior market ahead of the Brexit vote (Source: Getty)

Shares in Cenkos fell as much as 16.96 per cent to 95.50p per share this morning, after the City stockbroker revealed profits plunged as small cap fundraising dried up ahead of the Brexit vote.

The figures

Cenkos' pre-tax profit plummeted 91 per cent to £1.7m in the six months to 30 June, down from £18.6m in the first half of 2015.

This came as revenues fell 71 per cent to £15.3m during this period, down from £53.1m in the first half of 2015.

Cenkos cut its dividend by 86 per cent to one pence per share, while its basic earnings per share tanked 95 per cent to 1.2p.

Why it's interesting

Cenkos raised £529m for its small cap clients in the first half of this year, down from £2bn in the same period a year earlier. However, the latter figure had been boosted by a £1bn windfall from the floatation of BCA Marketplace.

It came as firms aimed away from London's junior market ahead of the Brexit vote. UHY Hacker Young’s said 40 initial public offerings (IPOs) raised £721.6m in the first half of 2016, down from £1.2bn from 70 IPOs in the same period a year ago.

The broker also made reference to its £530,500 fine from the Financial Conduct Authority (FCA) which was levied due to its involvement with the scandal-hit insurance outsourcer Quindell.

"The FCA's investigation of the company was concluded in August 2016, with the FCA acknowledging the extensive remediation programme undertaken by the Company in order to enhance and improve its systems and controls in relation to its sponsor services," it said.

What Cenkos said:

Jim Durkin, chief executive at Cenkos, warned that the Brexit vote means: "there is increased uncertainty in equity markets and we continue to monitor the situation.

But the firm's outlook remained positive, after making a good start to second half of this year: "There is institutional demand to fund high quality companies and ideas. Since July we have been engaged in relation to a number of significant fundraisings and our pipeline for the rest of the year is encouraging."

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