REG - Cavendish Financial - 2024 Interim Results
19/12/2023 07:00
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RNS Number : 2177X Cavendish Financial PLC 19 December 2023
Cavendish Financial plc
2024 Interim Results
19 DECEMBER 2023: Cavendish Financial plc (together with its subsidiary
undertakings, "Cavendish" or the "Group") today announces unaudited interim
results for the period ended 30 September 2023.
Julian Morse and John Farrugia, Co-Chief Executive Officers at Cavendish,
said:
"We are delighted with the progress our teams have made in the short time
since the merger in September. Careful planning enabled rapid business
integration, unlocking £7m of cost synergies, more quickly than we originally
forecast.
We are already winning clients and have executed over 20 transactions across
all divisions since coming together. Despite the significant one-off costs
of merger, our cash balance had risen to £17m on 30 November.
Perhaps most pleasing has been the positive feedback received from existing
clients, with us achieving our goal of providing enhanced service through our
much deeper resource, efficient business model and renewed energy. Whilst we
intend to make strategic hires, our teams are settled and we are well
positioned to benefit from improving market conditions when they come."
CAVENDISH - A LEADING UK MID-MARKET INVESTMENT BANK
· Merger of finnCap Group plc ("finnCap") and Cenkos Securities plc
("Cenkos") legally effective on 7 September 2023
· Creation of Cavendish, the clear no.1 AIM adviser with over 200
retained corporate clients, serviced by enlarged sector focused teams.
· Wide product expertise across ECM, private and public M&A, debt
advisory and private capital
· Enhanced corporate broking, distribution and equity research offering
for all clients
· Pro forma revenue to 30 September 2023: £19.5m (H1 FY23: £23.3m)
STRONG POST-MERGER PERFORMANCE((1))
· £7m annualised cost synergies locked in, ahead of and quicker than
our pre-merger plans
· Effective pre-planning and the subsequent rapid integration of teams,
systems and processes has enabled uninterrupted focus on client service
· Since completion, Cavendish has been appointed by 3 new premium
listed clients.
· Over 20 transactions already executed together since becoming the
combined group.
BOARD APPOINTMENT
· Appointment of Mark Astaire - former Vice Chairman of Investment
Banking and Chairman of Corporate Broking of Barclays Investment Bank as an
independent Non-Executive Director
Capital Strength for investment and challenging market conditions
Post integration costs, the Group has substantial regulatory capital and
liquidity. After merger costs, dividend and bonus payments, cash at 30
September 2023 was £12.3m. Cash has risen to £17m at 30 November 2023,
driven by the completion of over 20 transactions in the period.
FINANCIAL OVERVIEW(2))
· Consolidated results include the results of Cenkos from 7 September
2023.
· Consolidated revenue: £13.4m (H1 FY23: £16.4m) reflecting lower ECM
and private M&A activity during the summer months across the UK markets.
· Operating loss: £2.0m (H1 FY23: loss £2.3m)
· Adjusted loss before tax: £3.6m (H1 FY23: loss £0.5m), see note 9.
· Loss per share: 0.7p (H1 FY23: loss per share 1.8p)
OUTLOOK
The current interest rate upcycle appears to be nearing completion, but
inflationary pressures, although reduced, remain a risk. With relatively
higher yields available to investors on cash deposits we continue to see a
drag on market demand for UK growth equity. This has continued to adversely
impact equity transactions and trading, but private and public M&A
activity remains resilient. The breadth of the service offering was a key
driver for the merger, putting us in a strong position to weather market
conditions. Post-merger enhancements in winning and executing business allied
to a tentative pick up of the markets in the last three months has enabled us
to get off to a good start in the second half. We look forward to building on
this momentum, underpinned by a good pipeline, lower overheads and a strong
cash position.
CONTACTS
Cavendish (Management)
Tel: +44
(0) 20 7220 0500
Julian Morse, Co-Chief Executive
Officer
investor.relations@cavendish (mailto:investor.relations@cavendish) .com
John Farrugia, Co-Chief Executive
Officer
Ben Procter, Chief Financial Officer
Grant Thornton (Nominated Adviser)
Tel: +44 (0) 20 7383 5100
Philip Secrett/Samantha Harrison
Cavendish (Broker)
Tel: +44 (0) 20 7220 0500
Tim Redfern
Hudson Sandler (PR adviser)
Tel: +44
(0) 20 7796 4133
Dan de Belder/Rebekah Chapman
(1) Post-merger performance covers the period from 7
September 2023 to 30 November 2023.
(2) Basis of preparation: the results for the six
months to 30 September 2023 includes the consolidation of the results for
Cenkos Securities plc from completion of its merger with finnCap Group plc for
the period from 7 September 2023.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
BUSINESS REVIEW
On 7 September 2023, having received FCA approval, we completed the merger
between Cenkos and finnCap creating Cavendish, a new leading UK Investment
Bank focused on the mid-market and servicing over 200 retained clients.
Since the merger we have been actively engaging with our clients to discuss
the Group's wider range of sector and product expertise to support their
growth ambitions, and it has been pleasing to receive positive feedback from
clients noting enhanced service levels from the significantly enlarged team.
Taking best practices from across the combined firm has already improved our
service offering, both in terms of our day-to-day client engagement and how we
work together on transactions.
Within a few weeks of working together we were already winning new clients and
mandates and we continue to make good progress across the group. We have
integrated our client facing teams and continue to add talent where we see
opportunities. At the same time we have implemented our headcount cost
reduction where there was duplication and put in place our non-people cost
reduction programme, which has resulted in delivering cost synergies of over
£7m, in excess of our pre-merger target. We are now making selective
hires, recruiting additional talent to allow us to grow the business as market
conditions ease.
Our first half results only reflect the combined group for 3 weeks of the
reporting period. On a pro forma combined basis from 1 April 2023, we
generated revenues of £19.5m, before leveraging the benefits of our combined
expertise and enhanced service offering.
At the end of the period, we had net assets of £39.4m and cash of £12.3m
which has improved substantially since the half year end reflecting good deal
activity.
MARKET CONDITIONS
Persistent inflationary pressure and associated interest rate rises continued
to hamper investment in the equity of UK quoted growth companies across the
period, reflected in the 11% decrease in the FTSE AIM All Share Index in the
period and by far the lowest levels of new and secondary fund raising in the
last twenty years. In M&A, public company take-over activity is perhaps
the strongest we have seen and, although private equity buyers remain cash
rich, the UK economic environment is impacting on deal timetables.
INVESTMENT BANKING REVENUE ((3))
Investment Banking revenue comprises regular retainer income from corporate
clients and advisory fees earned from ECM, M&A, debt and private placings.
On a reported bases, revenue declined by 18% reflecting the impact of weaker
ECM and M&A market conditions over the summer months. On a pro forma basis
Investment Banking revenues of £16.8m were 19% less than in the prior period.
Despite the challenges of market conditions and managing the complexities of
the merger, we have protected our income from client retainers and executed a
number of client transactions, albeit at lower levels, in both the private
M&A and Equity Capital Markets.
Pro forma Reported
6 months ended 6 months ended 6 months ended 6 months ended
30 Sep 2023 30 Sep 2022 30 Sep 2023 30 Sep 2022
£'000 £'000 £'000 £'000
Corporate Retainers 6,471 6,203 3,914 3,452
Advisory Fees 10,287 14,522 8,019 10,983
Investment Banking Revenue 16,758 20,725 11,933 14,435
EQUITIES REVENUE ((3))
Weaker equity issuance and investor demand for UK equities did not detract
from the proactive engagement with institutional clients and the quality of
service we delivered, but did reduce market making profits and commission in
the period.
Pro forma Reported
6 months ended 6 months ended 6 months ended 6 months ended
30 Sep 2023 30 Sep 2022 30 Sep 2023 30 Sep 2022
£'000 £'000 £'000 £'000
Equities Revenue 2,768 2,581 1,432 1,917
OPERATING EXPENSES
Both firms maintained rigorous cost controls ahead of the merger. Merger
related advisory and severance costs are materially behind us. Most of the
targeted £7m reduction in annualised operating costs, from co-locating and
eliminating duplicate roles and support services, has already been achieved.
We are now focused on firmwide cost controls, automation and outsourcing to
further reduce our cost base.
Reported
6 months ended 6 months ended
30 Sep 2023 30 Sep 2022
Unaudited Unaudited
£'000 £'000
Employee benefit expense 11,855 11,329
Non-employee costs 5,663 5,728
Total administrative expenses 17,518 17,057
On a reported basis, excluding the incremental operating costs arising from
the merger, the change in administration costs reflects the benefit of the
cost reduction programme implemented in the finnCap Group in Q3 of FY23 with
staff and administration costs being in line with our expectations.
SHAREHOLDER REMUNERATION
The Board is committed to delivering returns for our shareholders. If we can
build on our strong post-merger performance we will consider dividend payments
with the full year results.
BOARD CHANGES
A separate announcement regarding proposed changes to the Board has been
issued today.
NON-RECURRING COSTS
Pro forma Reported Reported
6 months ended 6 months ended 6 months ended
30 September 2023 30 September 2023 30 September 2022
£'000 £'000 £'000
Negative goodwill (5,771) (5,771) -
Onerous contracts 1,811 1,811 -
Group restructuring 1,031 620 1,255
Transaction costs 1,335 1,115 189
Non-recurring items (1,594) (2,225) 1,444
Negative goodwill reflects the difference between of the fair value of Cenkos'
net assets at merger and the value of the shares issued for the purchase.
Onerous contracts reflect the write down of the property no longer occupied by
Cenkos. Group restructuring is the cost of the headcount reduction programme
and Transaction costs cover the advisory fees relating to the merger.
Further non-recurring items will be reported in H2 relating to completion of
the headcount reduction programme and redundant systems. Overall, the direct
costs of the merger are estimated to be c.£3.7m and the overall annualised
savings for the Group will be more than £7.0m.
In H1 FY23, the non-recurring items related to the headcount reduction
programme implemented by the Group.
(3) References to unaudited pro forma revenues reflect the addition of
the unaudited consolidated revenue of finnCap Group plc and the unaudited
consolidated revenue of Cenkos Securities plc for the relevant period as if
they were consolidated fully for that period. Pro forma information is a
non-GAAP measure and is provided to assist with a better understanding of the
Group's performance.
CONSOLIDATED INCOME STATEMENT
Unaudited for the 6 months ended 30 september 2023
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Notes
Revenue 2 13,365 16,352 32,864
Other operating expenses 3 (90) (138) (214)
Total income 13,275 16,214 32,650
Administrative expenses 4 (17,518) (17,057) (34,543)
Operating loss before non-recurring items (4,243) (843) (1,893)
Non-recurring items 5 2,225 (1,444) (3,658)
Operating loss (2,018) (2,287) (5,551)
Finance income 73 22 65
Finance charge (223) (242) (502)
Share of associate and joint venture losses (241) (85) (297)
Loss before taxation (2,409) (2,592) (6,285)
Taxation 1,168 (487) 767
Loss attributable to equity shareholders (1,241) (3,079) (5,518)
Total comprehensive expense for the year (1,241) (3,079) (5,518)
Loss per share (pence)
Basic 6 (0.66) (1.82) (3.25)
Diluted 6 (0.66) (1.82) (3.25)
CONSOLIDATED BALANCE SHEET
Unaudited for the 6 months ended 30 september 2023
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 11,960 12,518 12,239
Intangible assets 13,534 13,514 13,492
Investment in associates and joint ventures 1,987 2,218 2,106
Financial assets held at fair value 746 729 404
Deferred tax asset 8 i) 4,040 133 886
Total non-current assets 32,267 29,112 29,127
Current assets
Trade and other receivables 8 ii) 17,382 11,186 13,186
Current assets held at fair value 5,624 213 269
Cash and cash equivalents 12,341 11,124 9,382
Total current assets 35,347 22,523 22,837
Total assets 67,614 51,635 51,964
Non-Current liabilities
Lease liability 10,214 10,829 10,008
Borrowings 291 667 481
Provisions 66 30 29
Total non-Current liabilities 10,571 11,526 10,518
Current liabilities
Trade and other payables 17,247 9,122 14,632
Borrowings 414 364 843
Total current liabilities 17,661 9,486 15,475
Equity
Share capital 3,622 1,811 1,811
Share premium 1,716 1,716 1,716
Own shares held 8 iii) (5,090) (1,926) (1,926)
EBT reserve (350) (338) (294)
Merger relief reserve 8 iv) 25,151 10,482 10,482
Share based payments reserve 3,107 1,588 1,771
Retained earnings 11,226 17,290 12,411
Total equity 39,382 30,623 25,971
Total equity and liabilities 67,614 51,635 51,964
CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
Unaudited for the 6 months ended 30 september 2023
Own Merger Share Based
Share Share Shares EBT Relief Payment Retained Total
Capital Premium Held Reserve Reserve Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2022 1,799 1,475 (1,926) (322) 10,482 1,294 20,261 33,063
Total comprehensive expense for the period - - - (16) - - (3,063) (3,079)
Transactions with owners:
Share based payments charge - - - - - 386 - 386
Share options exercised 12 241 - - - (92) 92 253
12 241 - - - 294 92 639
Balance at 30 September 2022 1,811 1,716 (1,926) (338) 10,482 1,588 17,290 30,623
Total comprehensive expense for the period - - - 44 - - (2,483) (2,439)
Transactions with owners:
Share based payments charge - - - - - 191 - 191
Deferred tax on share-based payments - - - - - - (450) (450)
Dividends - - - - - - (1,954) (1,954)
Share options exercised - - - - - (8) 8 -
- - - - - 183 (2,396) (2,213)
Balance at 31 March 2023 1,811 1,716 (1,926) (294) 10,482 1,771 12,411 25,971
Total comprehensive expense for the period - - - (56) - - (1,185) (1,241)
Transactions with owners:
Share based payments charge - - - - - 746 - 746
Investment in subsidiaries 1,811 - (3,164) - 14,669 590 - 13,906
1,811 - (3,164) - 14,669 1,336 - 14,652
Balance at 30 September 2023 3,622 1,716 (5,090) (350) 25,151 3,107 11,226 39,382
CONSOLIDARED STATEMENT OF CASH FLOWS
Unaudited for the 6 months ended 30 september 2023
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Loss before taxation (2,409) (2,592) (6,285)
Adjustments for:
Depreciation 919 891 1,789
Amortisation of intangible assets 28 31 60
Share of associate and joint venture losses 241 85 297
Negative goodwill (5,771) - -
Onerous contracts 1,523 - -
Finance income (73) (22) (65)
Finance charge 223 242 502
Share based payments charge 746 386 577
Net fair value gains recognised in profit or loss 90 138 382
Payments received of non-cash assets - (15) (854)
(4,483) (856) (3,597)
Changes in working capital:
(Increase) / decrease in trade and other receivables (4,196) 1,888 398
Increase / (decrease) in trade and other payables 1,685 (10,505) (5,951)
Increase / (decrease) in provisions 37 (64) (65)
Acquisition of subsidiary working capital 1,810 - -
Cash utilised from operations (5,147) (9,537) (9,215)
Net cash payments for current asset investments
held at fair value through profit or loss (1,719) 658 602
Tax paid - (1,141) (1,155)
Net cash outflow from operating activities (6,866) (10,020) (9,768)
Cash flows from investing activities
Purchase of property, plant and equipment (109) (112) (724)
Purchase of intangible assets (70) (25) (40)
Proceeds on sale of investments - - 870
Acquisition of subsidiary, net of cash acquired 11,576 - -
Investments in associates and joint ventures (50) (2,022) (2,029)
Interest received 73 22 65
Net cash outflow from investing activities 11,420 (2,137) (1,858)
Cash flows from financing activities
Equity dividends paid - - (1,954)
Proceeds from exercise of options - 3 3
Interest paid (14) (21) (38)
Lease liabilities payments (962) (960) (1,555)
Repayment of borrowings (619) (176) (356)
Proceeds from borrowings - - 473
Net cash inflow / (outflow) from financing activities (1,595) (1,154) (3,427)
Net increase / (decrease) in cash and cash equivalents 2,959 (13,311) (15,053)
Cash and cash equivalents at beginning of period 9,382 24,435 24,435
Cash and cash equivalents at end of period 12,341 11,124 9,382
NOTES TO THE FINANCIAL STATEMENTS
Unaudited for the 6 months ended 30 september 2023
1. Basis of preparation
Cavendish Financial plc (the "Company") is a public limited company, limited
by shares, incorporated and domiciled in England and Wales. The Company was
incorporated on 28 August 2018. The registered office of the Company is at 1
Bartholomew Close, London EC1A 7BL, United Kingdom. The registered company
number is 11540126. The Company is quoted on the AIM of the London Stock
Exchange.
The financial Information contained within these condensed consolidated
Interim financial statements Is unaudited and has been prepared in accordance
with International Accounting Standard 34 Interim Financial Reporting ('IAS
34') and AIM Rule 18. The financial information contained in the Interim
Financial Statements is unaudited and does not constitute statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
The statutory accounts for the 12 months ended 31 March 2023 have been
delivered to the Registrar of Companies. The statutory accounts have been
prepared in accordance with International Financial Reporting Standards and
International Accounting Standards as adopted by the European Union and the
IFRS Interpretation Committee interpretations (collectively IFRSs), and in
accordance with applicable law. The Independent Auditor's Report to the
members of finnCap Group plc contained no qualification or statement under
section 498 (2) or (3) of the Companies Act 2006.
These consolidated Interim Financial Statements contain information about the
Group and have been prepared on a historical cost basis except for certain
financial instruments which are carried at fair value. Amounts are rounded to
the nearest thousand, unless otherwise stated and are presented in pounds
sterling, which is the currency of the primary economic environment in which
the Group operates.
The preparation of these Interim Financial Statements requires the use of
certain critical accounting estimates. It also requires Group management to
exercise judgement in applying the Group's accounting policies. Judgements and
estimates used in these Interim Financial Statements have been applied on a
consistent basis with those use in the statutory accounts for the 12 months
ended 31 March 2023.
As normal, the Group has assessed the appropriateness of accounting on a going
concern basis. This process involved the review of a forecast for the coming
15 months, along with stress testing a second downside scenario. Both cases
showed that the Group has the required resources to operate within its
resources during the period.
The Directors believe that the Group has adequate resources to continue
trading for at least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in preparing the
Interim Financial Statements.
2. Segmental reporting
The Group is managed as an integrated financial services group and the
different revenue streams are considered to be subject to similar economic
characteristics. Consequently, the Group is managed as one business unit.
The trading operations of the Group comprise of Corporate Advisory and
Broking, M&A Advisory and Institutional Stockbroking. The Group's revenues
are derived from activities conducted in the UK, although several of its
corporate and institutional investors and clients are situated overseas. All
assets of the Group reside in the UK.
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenues
Retainers 3,914 3,452 6,956
Transactions 8,019 10,983 22,632
Securities 1,432 1,917 3,276
Total Revenue 13,365 16,352 32,864
Services transferred at a point in time 8,665 12,100 24,413
Services transferred over a period of time 4,700 4,252 8,451
Total Revenue 13,365 16,352 32,864
3. Other operating EXpenses
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Other operating expenses (90) (138) (214)
4. Expenses by Nature
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Employee benefit expense 11,855 11,329 23,257
Non-employee costs 5,663 5,728 11,286
Total administrative expenses 17,518 17,057 34,543
Average number of employees 157 151 155
Employee benefit expense includes share based payments of £746k (H1 FY23:
£386k).
5. Non-recurring items
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Negative goodwill (5,771) - -
Onerous contracts 1,811 - -
Group restructuring 620 1,255 3,247
Transaction fees 1,115 189 411
Non-recurring items (2,225) 1,444 3,658
Non-recurring items in the period relate to negative goodwill, group
restructuring costs, onerous contracts and legal and professional fees in
connection with the acquisition of Cenkos Securities plc on the 7(th)
September 2023, see note 9.
6. Earnings per share
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
Earnings per share
Number of shares
Weighted average number of shares for the purposes
of basic earnings per share 187,101,924 169,041,783 169,724,785
Weighted average dilutive effect of conditional share
awards 2,453,333 3,011,648 11,847,873
Weighted average number of shares for the purposes
of diluted earnings per share 189,555,257 172,053,431 181,572,658
Loss per ordinary share (pence)
Basic loss per ordinary share (0.66) (1.82) (3.25)
Diluted loss per ordinary share (0.66) (1.82) (3.25)
The shares held by the Group's Employee Benefit Trusts have been excluded from
the calculation of earnings per share.
7. Dividends
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Dividends proposed and paid during the year - - 1,954
Dividends per share -p -p 1.15p
8. Balance Sheet Items
i) Deferred tax asset
Deferred taxation for the group relates to timing difference on the taxation
relief on the exercise of options and tax losses carried forward. The amount
of the asset is determined using tax rates that have been enacted or
substantively enacted when the deferred tax assets are expected to be
recovered.
ii) Trade and other receivables
Trade and other receivable principally consist of amounts due from client,
brokers and other counterparties. In addition, the Group has credit risk
exposure to the gross value of unsettled trades (on a delivery versus payment
basis) at its agency settlement agent (Pershing, a wholly owned subsidiary of
Bank of New York Mellon Corporation).
iii) Own Shares Held
The value of own shares held is the cost of shares purchased the Group's
Employee Benefit Trusts. The Trusts were established with the authority to
acquire shares in the Group and are funded by the Group.
iv) Merger relief reserve
The merger relief reserve represents:
· the difference between net book value of subsidiaries acquired
via share-for-share exchanges and the nominal value of the shares issued as
consideration. Upon consolidation, part of the merger reserve is eliminated to
recognise the pre-acquisition reserves of Cavendish Capital Markets Limited
(December 2018) and Cavendish Securities plc (September 2023); and
· the difference between the fair value and nominal value of shares
issued for the acquisition of Cavendish Corporate Finance (UK) Limited and
Cavendish Corporate Finance LLP from the acquisition in December 2018.
This reserve is not distributable.
v) Post balance sheet events
There are no material post balance sheet events.
9. Acquisition of Cavendish Securites PLC
On 7 September 2023, having received FCA approval, Cavendish Financial plc
issued 181,094,721 shares to acquired 100% of the share capital of Cavendish
Securities plc by means of a scheme of arrangement under Part 26 of the UK
Companies Act 2006 for consideration of £13.9m.
The fair value of the shares issue was calculated using the Cavendish
Financial plc market price of 9.1 pence per share, on the AIM exchange at its
close of business on 6 September 2023. The fair value was increased due to
employee share based awards outstanding at the acquisition date and reduced
due to shares held by the Cavendish Securities plc at the date of the
acquisition.
Book Value Fair Value Fair Value
6 September 2023 Adjustments 6 September 2023
Right of use assets 3,207 744 3,951
Deferred tax assets 2,049 (268) 1,781
Financial assets held at fair value 467 - 467
Other non-current assets 408 - 408
Trade and other receivables 8,182 - 8,182
Current assets held at fair value 3,636 - 3,636
Cash and cash equivalents 11,576 - 11,576
Trade and other payables (10,650) 328 (10,322)
Net assets acquired 18,875 804 19,679
Fair value of equity consideration 13,907
Negative goodwill (5,772)
IFRS3 requires the acquirer to perform a fair value exercise during the
measurement period which can last no more than twelve months from the date of
acquisition. An assessment of intangible assets was performed at the
acquisition as part of the implementation of IFRS 3. No additional assets were
recognised as a result of this review. The acquired right of use assets and
lease liabilities were recognised using the present value of the remaining
lease payments at the acquisition date.
Transactions costs of £1.1m were incurred in relation to the acquisition.
10. Related party transactions
During the period, 5,000,000 options with a 15p exercise price and 2,000,000
options with a 1p exercise price were issued to John Farrugia, a director of
Cavendish Finance plc. All of the options have a vesting period to two years.
11. Alternative performance measures
The below non-GAAP alternative performance measures have been used.
Adjusted profit before tax
Measure: Adjusted profit before tax is calculated excluding share based
payments, non-recurring items, share of associate profits and fair value gains
on long term investments.
Use: Provides a consistent measure of the earnings performance of the core
business activities.
6 months ended 6 months ended 12 months ended
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating loss (2,018) (2,287) (5,551)
Fair value gains on long term investments 90 138 -
Negative goodwill (see note 9) (5,771) - -
Other non-recurring expenses 3,546 1,444 3,658
Share based payments 746 386 577
Net finance charge (150) (220) (232)
Amortisation - - 59
Adjusted loss before tax (3,557) (539) (1,489)
Pro forma Revenues
References to unaudited pro forma revenues reflect the addition of the
unaudited consolidated revenue of finnCap Group plc and the unaudited
consolidated revenue of Cenkos Securities plc for the relevant period as if
they were consolidated fully for that period. Pro forma information is a
non-GAAP measure and is provided to assist with a better understanding of the
Group's performance.
INDEPENDENT REVIEW REPORT TO CAVENDISH FINANCIAL PLC
Unaudited for the 6 months ended 30 september 2023
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the London Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2023 which comprises the condensed Income Statement, the condensed
Statement of Comprehensive Income, the condensed Statement of Financial
Position, the condensed Cash Flow Statement and the condensed Statement of
Changes in Equity and all accompanying notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting."
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with
the London Stock Exchange AIM Rules for Companies which require that the
half-yearly report be presented and prepared in a form consistent with that
which will be adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
In preparing the half-yearly financial report, 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 review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange AIM Rules for Companies for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly disclaim any
and all such liability.
BDO LLP
Chartered Accountants
London, UK
Date 18 December 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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