City stockbroker Cenkos Securities doubles profit but warns on Brexit

Cenkos Securities, the City stockbroker focused on smaller companies, saw its own shares slump this morning after it cautioned on the year ahead.

Though the broker announced today that profit before tax almost doubled last year, to £10m, its share price took a hit of more than 12 per cent in early trading.

Chief executive Anthony Hotson warned of a "higher risk of disruption in 2018", reasoning that "the UK's decision to leave the European Union creates uncertainty for both the UK's financial industry and the wider markets" and "inflationary pressures and the possibility of further interest rate rises, compounded by geopolitical events further afield" could add to this.

Read more: Broker TP Icap is in talks with European regulators to potentially shift EU hub from London post-Brexit, as shares sink on weak results

Despite the note of caution, Cenkos did have good news. The company said that the implementation of the second Markets in Finanical Instruments Directive (Mifid II), which makes fund managers charge brokers for research rather than receiving it in return for a commission, "has gone well" – despite warnings from some that it could reduce the demand for such research.

Revenues were also up by 36 per cent to £59.5m, as a few large fundraisings helped drive business for Cenkos. The company especially noted its role in the float of Eddie Stobart Logistics, which raised £393m, and the secondary raisings of 302m for Civitas Social Housing, £408m for Hurricane Energy and £150m for Smart Metering Systems.

Overall, Cenkos worked on 41 transactions in 2017 including 6 initial public offerings (IPOs).

Read more: Cenkos broker bonuses rocket as Eddie Stobart float provides foundations to wheelie good 2017

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