Well now, Cavendish’s latest results have landed with the satisfying thud of a well-executed turnaround. The numbers tell a story of resilience and strategic recalibration – a far cry from last year’s losses. As an investor-focused boutique punching above its weight in the UK’s mid-cap arena, their journey from red to black deserves a closer look.
From Losses to Profits: The Financial Pivot
The headline grabber? A swing from a £1.8m adjusted pre-tax loss to a £3.7m profit. That’s not just progress – it’s a statement. Statutory figures echo the theme, moving from a £4.3m loss to a £0.7m profit. Revenue nudged up to £55.6m, while cash balances held firm at £21.2m. But the real icing? A dividend hike to 0.8p per share – over triple last year’s 0.25p payout. That’s confidence, served cold.
Key Financial Snapshot
- Adjusted PBT: £3.7m profit (FY24: £1.8m loss)
- Revenue: £55.6m (slight YoY increase)
- Dividend: 0.8p total (0.3p interim + 0.5p final proposed)
- Cost Discipline: Non-employee costs down 16% to £14.8m
The Engine Room: Transactions and Transformation
Beyond the numbers, Cavendish executed over 100 deals worth £2.7bn – no small feat in a patchy market. But the real intrigue lies in how they did it:
Public Markets: Playing the Long Game
Public M&A fees plummeted 55% as dealmaking slowed, but Cavendish shrewdly offset this with a 23% surge in equity issuance – including 70 transactions raising £2.1bn. Why does this matter? IPOs and placings build lasting relationships and recurring revenue. As Co-CEOs Julian Morse and John Farrugia noted, M&A might deliver bigger one-off fees, but it often means losing a client. Equity work keeps them in the fold.
Their AIM dominance continues, with 21 new quoted clients added and a staggering 60% share of UK IPO capital raised in the last six months. This isn’t just activity; it’s strategic positioning.
Private Markets: Fee Power & Sector Focus
Here’s where Cavendish flexed muscle: private deal volume rose 15%, and average fees jumped 13%. Sectors like tech services, healthcare, and specialised industrials drove this, with private equity and family offices hunting for quality assets. Their regional push – new offices in Manchester and Birmingham – isn’t just geography; it’s about embedding deeper in local ecosystems.
The Secret Sauce: Data, Talent & Tight Cost Control
- Data Analytics: Investing in AI and insights to transform origination and execution.
- Compensation Ratio: Trimmed to 64% (down 8%), balancing staff rewards with profitability.
- Efficiency Gains: Annualised admin costs per head fell 6% to £75k, while revenue per head rose 4%.
Outlook: Positioning for the UK’s Reawakening
Cavendish’s optimism isn’t generic cheerleading. They’re betting on a tangible shift:
- Private Pipeline: Active engagement with 150 UK private equity firms sitting on £50bn of deployable capital.
- Public Market Inflection: Noting “tentative signs” of capital rotating into undervalued UK small/mid-caps – with Cavendish already executing 2025’s largest UK IPO.
- Geopolitical Hedge: Positioning UK equities as a refuge from US policy volatility, citing sterling weakness and relative European outperformance.
As Morse and Farrugia put it: “We move forwards with strategic clarity.” This isn’t just recovery; it’s a recalibrated growth engine firing on multiple cylinders – public and private, data-driven and regionally anchored. For investors, that 0.8p dividend isn’t just a reward; it’s a down payment on their conviction.
