Results for the six months ended 31st October 2018
finnCap Group plc
("finnCap" or the "Company" or the "Group")
Unaudited results for the six months ended 31st October 2018 (the "Interim Period")
finnCap Group plc (AIM: FCAP.L) today announces the unaudited results for finnCap Ltd for the six months ended 31st October 2018. finnCap Group plc is the holding company that acquired finnCap Ltd for shares on 22nd November 2018 (after the end of the Interim Period), and is reporting the results of finnCap Ltd for the Interim Period as this was the operating entity that is deemed to have been commonly controlled throughout the period. Subsequent to the period end, the Company acquired Cavendish Corporate Finance LLP and Cavendish Corporate Finance (UK) Ltd (together "Cavendish"), a leading mid-market sell-side M&A advisor, and was admitted to trading on AIM on 5th December 2018. As the acquisition of Cavendish occurred after the end of the Interim Period, the financial statements do not include the results of Cavendish, which results are expected to constitute a material component of the Group's performance in the second half of the year and thereafter. Further details on Cavendish's performance are given below in the Chief Executive's Statement.
Financial highlights:
· Revenue: £11.7m (2017: £13.1m) in line with management's expectations
· Profit before tax: £2.1m (2017: £2.7m)
· Dividend: £1.18m paid in June 2018 (2017: £800k) and a further £225k paid as an interim after the period end (2017: £255k); the intention is to declare a small dividend in January 2019, subject to the necessary court approval for a capital reorganisation
Commenting, CEO Sam Smith said:
"This has been an incredibly exciting time for finnCap - we performed strongly in the period, acquired Cavendish to enable us to offer a broader range of services to a larger number of companies both public and private, and joined our 125 public market clients by listing on AIM. We are now exceptionally well positioned to advise ambitious growth companies on all of the major forms of financing, including debt, venture capital, IPOs, subsequent public offerings, as well as offering sell-side M&A, exit planning, bid defence and PLC regulatory advice. There are very few other firms that can offer such a wide range of services to our target client base, and we are very excited about the potential for our business."
Chief Executive's Statement
In the Interim Period, finnCap generated a pre-tax profit of £2.1m, from revenues of £11.7m. This is in line with management's expectations, and compares to our performance for the year to 30th April 2018 of pre-tax profit of £3.1m, from revenues of £22.1m, which was itself finnCap's most profitable year to date. The reduction in revenue compared to the same period in the prior year related to the timing of one large corporate fee and a reduction in secondary commission. The reduction in secondary commission was expected and finnCap had accordingly reduced its cost base. Retainers, trading commissions and deal fees have all been in line with the Directors' expectations.
This strong performance was the result of our continued focus on providing our clients with the advice to promote their investment case to the right audience, combined with the ability to access capital from a wide range of institutions and investors. We have also continued to ensure that we are capable of strong trade execution on behalf of our institutional clients.
In December 2018, finnCap acquired Cavendish Corporate Finance, a leading sell-side M&A advisor to mid-market companies, and the enlarged group was admitted to trading on AIM on 5th December 2018. The directors see material opportunities for both sides of the business from their combination.
The acquisition materially expands the services that both finnCap and Cavendish can provide to their respective clients, and enables the combined group to advise on a wider range of financing options for both public and private companies. As the acquisition was after the end of the Interim Period, there is no recognition in these results of Cavendish's performance. Cavendish performed strongly in the first half of its financial year, and its unaudited management accounts show turnover was £9.4m for the 6 months to 30th September 2018. This performance almost matched its revenues for the full year performance to 31st March 2018 of £10.2m, on which it generated pre-tax profits of £1.84m.
The Board remains optimistic about the Group's prospects despite the current uncertain economic and political climate. As stated in the Admission Document, the Board's current intention is to declare a small dividend in January 2019, subject to the necessary court approval for a capital reorganisation. Additionally, the Board intends to declare a further dividend alongside its final results which it expects to announce in June 2019.
Sam Smith
Chief Executive Officer
2nd January 2019
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31st October 2018
|
|
Six months |
Six months |
Year |
|
|
ended |
ended |
ended |
|
|
31 October 2018 |
31 October 2017 |
30 April 2018 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Revenue |
11,750 |
13,129 |
22,137 |
|
Other operating income |
3 |
5 |
18 |
|
Total income |
11,753 |
13,134 |
22,155 |
|
Administrative expenses |
(9,714) |
(10,432) |
(19,137) |
|
Operating profit |
2,039 |
2,702 |
3,018 |
|
Finance income |
15 |
18 |
32 |
|
Profit before tax |
2,054 |
2,720 |
3,050 |
|
Taxation |
(387) |
(548) |
(615) |
|
Profit after tax |
1,667 |
2,172 |
2,435 |
|
Dividends |
(1,181) |
(800) |
(1,056) |
|
Retained profits |
486 |
1,372 |
1,380 |
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
At 31st October 2018
|
|
At |
At |
At |
|
|
31 October 2018 |
31 October 2017 |
30 April 2018 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
|
ASSETS |
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
Property, plant and equipment |
457 |
523 |
445 |
|
Intangible assets |
122 |
74 |
121 |
|
Financial assets held at fair value through profit and loss |
388 |
280 |
388 |
|
|
967 |
878 |
954 |
|
CURRENT ASSETS |
|
|
|
|
Trade and other receivables |
8,204 |
5,982 |
9,242 |
|
Current asset investments held at fair value through the profit and loss |
1,464 |
774 |
646 |
|
Cash and cash equivalents |
4,663 |
4,832 |
4,521 |
|
|
14,330 |
11,588 |
14,410 |
|
TOTAL ASSETS |
15,296 |
12,466 |
15,364 |
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Share capital |
1,184 |
1,180 |
1,180 |
|
Share premium |
785 |
768 |
768 |
|
Capital redemption reserve |
452 |
452 |
452 |
|
Own shares held |
(1,937) |
(289) |
(676) |
|
Employee Benefit Trust reserve |
(69) |
(54) |
(54) |
|
Share based payments reserve |
299 |
211 |
247 |
|
Retained Earnings |
5,898 |
5,380 |
5,419 |
|
TOTAL EQUITY |
6,612 |
7,647 |
7,335 |
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
Provisions |
74 |
141 |
74 |
|
Deferred tax liability |
0 |
16 |
0 |
|
|
74 |
158 |
74 |
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Taxation payable |
941 |
1,121 |
859 |
|
Trade payables |
839 |
901 |
947 |
|
Other payables |
6,829 |
2,639 |
6,149 |
|
|
8,610 |
4,661 |
7,955 |
|
TOTAL LIABILITIES |
8,684 |
4,819 |
8,029 |
|
TOTAL EQUITY AND LIABILITIES |
15,296 |
12,466 |
15,364 |
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the period ended 31st October 2018
|
|
Six months |
Six months |
Year |
|
|
ended |
ended |
ended |
|
|
31 October 2018 |
31 October 2017 |
30 April 2018 |
|
|
Unaudited |
Unaudited |
Audited |
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Cashflows from operating activities: |
|
|
|
|
Profit before taxation |
2,054 |
2,720 |
3,050 |
|
Adjustments for: |
|
|
|
|
Depreciation |
110 |
111 |
221 |
|
Amortisation of intangible assets |
19 |
13 |
30 |
|
Finance income |
(15) |
(18) |
(32) |
|
Share based payments charge |
52 |
44 |
85 |
|
Net fair value gains recognised in profit or loss |
(21) |
(18) |
(142) |
|
Payments received of non-cash assets |
- |
(100) |
(161) |
|
|
2,199 |
2,752 |
3,051 |
|
Changes in working capital: |
|
|
|
|
Decrease / (increase) in trade and other receivables |
1,018 |
869 |
(2,366) |
|
(Decrease) / increase in trade and other payables |
671 |
(2,355) |
1,171 |
|
(Decrease) / increase in provisions |
0 |
0 |
(67) |
|
Cash generated from operations |
3,888 |
1,266 |
1,788 |
|
|
|
|
|
|
Net cash payments for current asset investments |
|
|
|
|
held at fair value through profit or loss |
(797) |
(475) |
(328) |
|
Corporation tax paid |
(403) |
(322) |
(637) |
|
Net cash inflow from operating activities |
2,689 |
470 |
824 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
(122) |
(79) |
(111) |
|
Purchase of intangible assets |
(19) |
(21) |
(85) |
|
Proceeds on sale of investments |
- |
129 |
188 |
|
Interest received |
15 |
18 |
32 |
|
Net cash (outflow)/inflow from investing activities |
(126) |
47 |
24 |
|
Cash flows from financing activities |
|
|
|
|
Purchase of own shares by Employee Benefit Trust |
(1,261) |
(193) |
(580) |
|
Equity dividends paid |
(1,181) |
(796) |
(1,051) |
|
Proceeds from exercise of options |
21 |
25 |
25 |
|
Net cash outflow from financing activities |
(2,421) |
(964) |
(1,606) |
|
Net increase/(decrease) in cash and cash equivalents |
141 |
(447) |
(758) |
|
Cash and cash equivalents at beginning of year |
4,521 |
5,279 |
5,279 |
|
Cash and cash equivalents at end of year |
4,663 |
4,832 |
4,521 |
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Basis of preparation
As permitted under AIM listing rules, IAS 34, "Interim Financial Reporting" has not been applied in this interim report.
The financial information presented in this report has been prepared using accounting policies that are expected to be applied in the preparation of the financial statements for the period ending 31 March 2019.
These policies are in accordance with the recognition and measurement principles of International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board as endorsed for use in the European Union.
The company has adopted the following new standards and interpretations in the historical financial information:
· IFRS 15 - Revenue from Contracts with Customers (effective 1 January 2018 and early adopted); and
· IFRS 9 - Financial instruments (effective 1 January 2018 and early adopted).
The adoption of the above standards had no material impact on the results or financial position in any of the periods presented.
The financial information in this interim report does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.
The Annual Report and Financial Statements for 2018 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2018 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The financial information for the periods ended 31st October 2017 and 31st October 2018 are unaudited and have not been reviewed by the Company's auditors.
Going concern
The financial statements of the Group have been prepared on a going concern basis as the Directors have satisfied themselves that, at the time of approving the financial statements and having taken into consideration the strength of the Group's statement of financial position and cash balances, the Group has adequate resources to continue trading for the foreseeable future.
2. Segmental analysis
The trading operations of finnCap comprise Corporate Advisory and Institutional Stockbroking. The Company's revenues are derived from activities conducted in the UK, although a number of its corporate clients and institutional investors are situated overseas. All of the assets of the company are located in the UK.
Analysis of revenue
All revenue has been generated from the UK.
|
|
Six months |
Six months |
Year |
|
|
ended |
ended |
ended |
|
|
31 October 2018 |
31 October 2017 |
30 April 2018 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Income from trading activities |
2,037 |
2,960 |
5,080 |
|
Corporate finance income |
9,664 |
10,160 |
16,945 |
|
Other fees and commissions |
49 |
9 |
112 |
|
|
11,750 |
13,129 |
22,137 |
|
|
|
|
|
|
|
Six months |
Six months |
Year |
|
|
ended |
ended |
ended |
|
|
31 October 2018 |
31 October 2017 |
30 April 2018 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Fees generated from contracts with customers |
10,785 |
11,605 |
19,419 |
|
Income not generated from contracts with customers |
964 |
1,524 |
2,718 |
|
|
11,750 |
13,129 |
22,137 |
3. Post balance sheet events
On 22nd November 2018, finnCap Ltd declared a dividend of £0.00207 per share, totalling £225,000.
On 22nd November 2018, finnCap Ltd was acquired in a share for share exchange by finnCap Group Limited. As a result, the economic and voting interests of the shareholders in finnCap Ltd were effectively migrated to finnCap Group Limited.
On 28th November 2018, finnCap Group Limited re-registered as a public limited company.
On 5th December 2018, finnCap Group plc was admitted to trading on AIM, and simultaneously acquired Cavendish Corporate Finance, a leading mid-market sell-side M&A advisor. As this acquisition completed after the end of the Interim Period, there is no recognition of the performance of Cavendish in these interim figures. However, details of Cavendish's performance are given above in the Chief Executive's Statement.
On 5th December 2018, finnCap Group plc shortened its current accounting period to end on 31st March 2018, which will be its Group reporting date going forward.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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