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 Cavendish'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. 

11 November 2024

Cavendish Financial plc

("Cavendish" or the "Group")

2025 Interim Results

Cavendish Financial plc (AIM: CAV), a leading UK investment bank and trusted adviser to both public and private companies, today announces unaudited interim results for the six month period ended 30 September 2024.

H1'25 FINANCIAL HIGHLIGHTS

•       Revenues of £27.7m increasing 42% vs the same period last year (H1'24: £19.5m)

•       Cash balances at 30 September of £17.2m, an increase of 40% vs the same date last year (H1'24: £12.3m)

•       Remained strongly cash generative since the period end, with current cash balances as at 7 November 2024 of £23.3m

•       Adjusted profit before tax* of £1.8m delivers a 7% profit margin

•       Interim dividend of 0.3p per share, reflecting profitable performance during the period and confidence in performance for the full year

•       Adjusted Earnings per Share*: 0.4p (H1'24:(1.6p))

H1'25 OPERATIONAL HIGHLIGHTS

·     More than 50 transactions executed during the period, with a value of £1.8 billion

·     Continued investment in Group talent, with select hires across front office teams

·     Non-employee costs reduced by 12% to £7.7m during the period (H1'24: £8.8m) reflecting continued Group efficiencies, investments in AI capabilities and the ongoing scale benefits of the merger

* Adjusted profit before taxation prior to share-based payments, non-recurring items (of which there were zero in the period), share of associate profits and fair value gains on long term investments.

Prior period comparatives are on an unaudited pro forma basis reflecting the addition of the unaudited consolidated results of finnCap Group plc and the unaudited consolidated results 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.

JULIAN MORSE AND JOHN FARRUGIA, CO-CHIEF EXECUTIVE OFFICERS OF CAVENDISH, COMMENTED:

"Our profitable first half, in both public and private markets, demonstrates the broad appeal of our service offering and the efficiency of our platform.  We have a solid pipeline of both public and private transactions in train including a number of potential IPOs. 

In the period we have executed over 50 transactions, with a value of £1.8bn. We have increased our share in the public markets, both in terms of the number of AIM clients (rank 1st) and also by adding clients on the Main Market. In doing so, we have increased the average market capitalisation of our client base.

The removal of the recent fiscal uncertainty is one step forward in realising the value in UK small and mid-cap quoted companies and we are committed to driving the dialogue to stimulate further investment in such companies. We are pleased that AIM was recognised by name during the recent Budget Statement, which is undoubtedly a reflection of the contribution its companies make to the UK's real economy and Cavendish is immensely proud to play its part in this vital sector.

Whilst market conditions have yet to improve significantly post the general election, we remain well placed to benefit as and when they do."

CAPITAL STRENGTH

The Group continues to have surplus capital and a strong liquidity position, reflecting careful cash flow management and operational efficiency. This provides the flexibility to adapt to changing market conditions and to invest in opportunities that align with our growth objectives.

INTERIM DIVIDEND

The Board has declared an interim dividend of 0.3p per share in respect of the six months ended 30 September 2024 (the "Interim Dividend") (total dividend 0.25p in FY'24). The Interim Dividend will be paid on 11 December 2024 to shareholders registered on the record date of 22 November 2024, reflecting Cavendish's commitment to returning value to shareholders.

OUTLOOK

Cavendish has started the second half well, with the H2'25 revenue run rate continuing in-line with H1'25 and deal flow balanced across ECM, Public and Private M&A, Debt Advisory and Private Growth Capital.  We are positive about the future as we continue to win clients and see increasing demand for IPOs as companies seek to join the UK markets. 

In the recent UK Budget, the Chancellor's announcement that shares in companies quoted on AIM will be afforded 50% inheritance tax relief from 5 April 2026 recognises the vital role played by this market in the UK's economic growth and removes any uncertainty about its future.

We believe this relief, coupled with the inclusion from 2027 of unused pension funds within inheritance tax, means AIM shares will become particularly attractive from a tax planning perspective.

UK small and mid-cap markets are trading at historically high multi-decade discounts to their global peers. With interest rates reducing, a positive agenda for pension fund reforms, a stable political landscape and the uncertainty around AIM now resolved, we see the attraction of investing in the UK increasing and expect the headwinds that have been constraining our markets to abate, narrowing this discount. Furthermore, we do not expect that the modest increases to capital gains tax will impact levels of activity for public or private company transactions.

BUSINESS REVIEW

Revenue from public and private market transactions continued to be well diversified.  Transaction volumes were broadly consistent with H2'24, with the size of public market deals reducing in the latter part of the period as the market became increasingly nervous ahead of the Budget on 30 October 2024.

Share trading activity was relatively buoyant in the early part of the period facilitating the raising of funds for quoted companies, though it slowed in the latter part of the period due to uncertainty around the Budget.

MARKET CONDITIONS

The FTSE AIM All Share Index was broadly flat over the six-month period to 30 September 2024, having increased by more than 9% in the first two months and declining thereafter.   By contrast the FTSE 100 Index increased by 5.4%. Other small cap markets that were not directly affected by fiscal uncertainty around the Budget performed well in the period with the FTSE Small Cap index increasing by 8.6% over the period and the FTSE 250 increasing by 8.8%. The immediate market reaction to the Budget was a 4% increase in the value of the AIM All-Share Index, reflecting the removal of much of the uncertainty about the future of the market.

Other market drivers have continued to improve gradually, with less inflationary pressure, falling interest rates, and a new Government exploring ways to stimulate growth. 

INVESTMENT BANKING REVENUE

Investment Banking revenue comprises recurring retainer income from corporate clients and advisory fees earned from ECM, M&A, debt and private placings.

On a pro forma basis, revenue increased by 49% versus the same period last year, reflecting the diversity of our service offering and the ability to continue to execute transactions on behalf of our clients despite sometimes challenging market conditions.

EQUITIES REVENUE        

Despite subdued equity issuance and investor demand during the period in the UK, we maintained our proactive engagement with institutional clients and focus on the quality of service we delivered. Market making profits and commission income were slightly ahead of the same period last year, on a pro forma basis.

OPERATING EXPENSES

Disciplined cost control delivered improvements with a wide range of vendor services which reduced non-employee costs by 12% compared with the same period last year on a pro forma basis.   These improvements provide us with the headroom to fully absorb increased employee costs following the increase to National Insurance announced in the Budget.

Increased employee costs relative to the same period last year reflect the return to profitability and a compensation ratio of 64%.

NON-RECURRING COSTS

There were no non-recurring costs in the period.

Negative goodwill reflects the difference between of the fair value of Cavendish Securities plc's 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 Cavendish Securities plc. Group restructuring is the cost of the headcount reduction programme and Transaction costs cover the advisory fees relating to the merger. 

CONSOLIDATED INCOME STATEMENT

UNAUDITED FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2024

CONSOLIDATED BALANCE SHEET

UNAUDITED FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2024