Cenkos Securities Share Discussion Threads

[f15jcm] 05/10/2020 14:03

Hi James. Not sure if you subscribe to IC but Simon Thomson mentions pay in his article today 'a relatively low fixed cost base, and a remuneration structure highly geared to performance, which means profit increases sharply in a positive operating cash cycle.'


I don't wish to patronise you but I think you may be getting overly hung up on staff costs. How does the likes of Tesco's wage bill compare to its profit? Net profit is what's left after staff (and everything else) have been paid, so does it really matter?

[topvest] 05/10/2020 14:00

Thanks - not bad. A bit more than I thought!

[speedsgh] 05/10/2020 12:28

"Subject to the terms and conditions of the Placing Agreement, the Company has agreed to pay Cenkos a fee of £200,000 plus VAT and a commission of up to 4.5 per cent. of the aggregate value of the Placing Price of the Placing Shares and the Sale Shares being sold."



Cenkos fee = 200,000 + (22.5m * 0.045) = 200,000 + 1,012,500 = £1,212,500

[quepassa] 05/10/2020 10:54

Had a look at the Admission Document and this looks like a big earner for Cenkos.

Docs available on the Calnex Solutions website in the Investors tab

hXXps://www.calnexsol.com/en/?start=20


ALL IMO. DYOR.
QP

[topvest] 05/10/2020 08:28

They managed to get this AIM IPO away today

Small but a decent fee no doubt. Not read the Aim admission document, but I would guess at a £0.5m - £1m fee.

[jamessmith23] 02/10/2020 18:38

Fully agree it reduces the downside in tougher times, however the variable remuneration in 2018 was about 5 times the overall profit and so I'm just looking to understand how that works. If cenkos do return to large levels of profitability, will it just be paid away in compensation incentives. Do you actually know how the payout system works?I like the look of this company and am interested in holding it, but am looking for a holder who is so bullish to explain how it worked in previous years and how it would work in the future if they do start to perform well, do any holders have actual numbers they can quote in the split between shareholders and employees? I find many holders buy into a company and will then paint a prettier picture than is actually there, I certainly have done, which is why I want to avoid that this time.

[topvest] 02/10/2020 18:08

Interim results are encouraging in my view. The CEO has reduced the cost base and increased revenues, albeit the prior year numbers I think are the worst they had ever done. I've been pondering a top-up to be honest. I think there are signs the CEO is starting to turn things around. What they need are active clients that do things and generate revenues, so loss making mandate losses are not a concern.

[f15jcm] 02/10/2020 16:41

James, Cenkos pay their staff with packages that are very performance based. Cenkos pay lower basic salaries than rivals such Numis but Cenkos bonuses are more attractive. It incentivises staff to perform. They only get bonuses when they do well for the company so everyone's a winner. Wages are a high variable cost but many businesses have high variable costs, it doesn't necessarily make them less attractive as an investment and it makes the business more resilient in tougher times.

[speedsgh] 02/10/2020 14:58

Loss of mandate. Cenkos have been replaced as Nomad/sole broker to Marechale Capital (MAC) by Cairn Financial Advisers (Nomad) & Novum Securities (sole broker)...

[jamessmith23] 02/10/2020 13:06

Not a lot of point using a figure that isn't actually relevant for shareholders though. Shareholders will never receive the underlying profit even if there are no one off costs such as restructuring. Variable remuneration in 2018 was £12.4m, it's on their investor page, and profit for shareholders was £2.35m, happy to have that explained to me as it doesn't make a huge amount of sense how that works?

[spooky] 02/10/2020 10:00

There are regulatory requirements for the amount of capital they need to hold.

[fredfishcake] 02/10/2020 09:54

Baffles me why they're keeping that much cash on the balance sheet. Anyone know why?

[quepassa] 02/10/2020 09:20

These look like strong figures to me and corroborate the positive sector news contained in the results from Numis yesterday which are worth reading together with the Edison Research Note which provides good sector opinion.

New issues are understandably down for Cenkos but this is the case across the small-cap sector but secondary fund-raisings have never been so buoyant.

The need for further secondary fund-raisings will likely grow significantly as more companies will need to repair covid-damaged balance-sheets.

Big-ticket M&A is very buoyant. This will likely trickle down to the small-cap sector in due course.

Astonishing cash balances at Cenkos add a great deal of comfort and even with a reduced dividend, the prospective yield is very attractive.

All positive and a sector which will increasingly need the services of M&A specialists like Cenkos.

ALL IMO. DYOR.
QP

[brownie69] 02/10/2020 09:19

Looks decent enough to me.

In round numbers £22m of cash and a market cap of £27m, ie the business ex cash is valued at £5m and it made £2.0m a P/E of 2.5 ? Whats not to like?

[spooky] 02/10/2020 09:08

STIP is 0.5m of the 1.158m

[molatovkid] 02/10/2020 08:53

On the other hand, add back £1.1m of presumably one-off restructuring costs and they are flying.

[trident5] 02/10/2020 08:47

The STIP only started in April - so the cost was only for one quarter.

Assuming the £1.9m was evenly spread over the half - the STIP got half the profit made in Q2.

[jamessmith23] 02/10/2020 08:14

If anyone has further details on the breakdown of the incentive plan then please let me know, as I am happy to be corrected!

[jamessmith23] 02/10/2020 07:55

Yeah this is what put me off buying previously. Looking at the years where there was large profits for shareholders, the incentives were of the same value or higher. Provided the base salaries aren't ridiculous (which in this industry they could be) having a variable cost via an incentive plan does reduce the downside but also the upside. Also these plans are often exponential, as in the better you do above your target, the higher % of commission you make, which is also bad for shareholders.I don't have exact details of the incentive plan, realistically I should take a look, but with such a low enterprise value I have been tempted here for a long time, and the only thing that has held me back is I can very much believe the incentive plan cuts out profits for shareholders. No major shareholding by directors of over 10% and only 2 over 5%, so can imagine they are very happy receiving their pay out via incentives, and with a company this size it won't get much scrutiny.

[grahamg8] 02/10/2020 07:21

Reasonable set of numbers. But what worries me is that revenue up £2.3m meant staff costs were up £1.0m in incentive payments and assets down as shares bought in order to give to staff. Once tax is paid on what's left there isn't ever going to be much left over for the shareholders.

[f15jcm] 30/9/2020 13:10

Do we know when to expect the interims? I believe they had already been published by this point last year?

[speedsgh] 29/9/2020 20:08

New mandate. Cenkos have been appointed joint broker, alongside existing joint broker Peterhouse Capital, to Agronomics Ltd (ANIC). They replace Zeus Capital; Beaumont Cornish remain Nomad...

[speedsgh] 28/9/2020 15:30

New mandate. Cenkos have been appointed joint broker, alongside existing broker Liberum, to Honeycomb Investment Trust (HONY)...