City broker Cenkos saw profits plunge by 68% after a “difficult” year hit by a lack of large deals.
The small and mid-cap specialist, which worked on large flotations of AA and BCA Marketplace five years ago, could only piece together small transactions in 2018, such as the £43 million listing of Rosenblatt law firm and £170 million placing for Breedon. Profits fell to £3.2 million from £10 million.
Chief executive Anthony Hotson, who stands down this summer, said: “2018 was a difficult year for stockbrokers. The deal flow in the first half was way down. In the second half it improved a lot. Deals were delayed. It was lots of smaller transactions.” Cenkos also said Brexit had “disrupted confidence”.
Cenkos has taken an axe to costs, closing an office in Singapore and concentrating forces in London and Scotland to focus on corporate finance and broking activities.
The company said regulatory changes such as Mifid II, which forced fund managers to pay for company research, hit revenues, as fund managers cut research budgets. Research revenue fell to £2.7 million from £2.9 million but in corporate finance revenue was down to £32.7 million from £44 million.
However Hotson, set to be replaced by Cenkos founder Jim Durkin, said things were looking up.
He said: “The problem with this business is it’s difficult to predict more than a couple of months ahead but at the moment we have a sight of deals which makes us more optimistic.”
