finnCap Group PLC Trading Update (3210I)
April 01 2020 - 1:00AM
UK Regulatory
TIDMFCAP
RNS Number : 3210I
finnCap Group PLC
01 April 2020
1 April 2020
finnCap Group plc
("finnCap" or the "Group")
Trading Update
The Board is pleased to announce that the Group's trading
performance since the announcement of 27 February has been in line
with the Board's cautious expectations set out at that date. The
second half trading performance is expected to be broadly breakeven
with the equity capital markets division performing in line with
the first half and the M&A division behind, as was previously
stated. Turnover for the year is expected to be approximately
GBP25.8m (11 months ended 31 March 2019: GBP24.5m).
An indication of how rapidly the world has changed is that on 27
February we only noted the spread of Covid19 and yet five weeks
later the government has implemented extreme social and economic
measures in response to Covid19 and the United Kingdom is now in a
"lockdown". Clearly these factors are expected to have a material
negative impact on the Group's performance in the financial year to
31 March 2021 ("FY 2021"). However, the nature and the timescale of
such impact is currently very uncertain. For the time being we
still have a strong pipeline of M&A deals for Q1 FY 2021,
albeit we expect to see a number of deals pulled or delayed, and
the equity capital markets division continues to complete
transactions.
In response to recent events the Group has moved all of its
employees to remote working and is pleased to note this has had no
material impact on our ability to operate to date. The Board has
also reviewed the Group's operating expenses and taken swift action
to minimise the financial impact of the uncertainty caused by
Covid19. The measures taken include salary and fee sacrifices for
all Board members for a period of three months (being 100 per cent
of fees for non executive directors and between 92.5 per cent. and
44.0 per cent. of salary for executive directors), salary
sacrifices by Group employees for three months, the furloughing of
a number of staff and the cancellation or deferral of all
discretionary expenditure. Together with the cost reductions
referred to in the announcement of 27 February (which included the
closure of the Slide Rule Fund), these actions -will reduce the
cash monthly operating expenses of the Group to be 31% lower than
those incurred in February 2020.
The Board intends to maintain a strong balance sheet and
currently has financial resources well in excess of its regulatory
requirements. The Group will take advantage of its ability to defer
payment of VAT in line with the government's proposals. The Board
has also taken the difficult decision that it will not pay the
second dividend for the year ended 31 March 2020 in light of the
current crisis and the cash conservation measures outlined
above.
The Board is planning for a very difficult trading period ahead,
particularly in the Group's M&A division. In light of this it
is pleasing that the Group's equity capital markets division has
continued to advice on deals throughout the last few weeks
including equity fundraises for Synairgen plc, PCI-Pal PLC and
Trackwise Designs PLC, and some of the fees associated with these
will be recognised in FY 2021. The Group has also continued to
generate secondary trading commission, make markets profitably,
sign up retained clients in the equity capital markets division and
secure mandates in the M&A division since the beginning of
March.
Our ability to do this and move to operating remotely is
testament to the dedication and quality of our employees who have
quickly adjusted to the current environment. In order to recompense
staff for sacrificing salary for the next three months, the Board
today intends to grant options over approximately 5.3m ordinary
shares exercisable at a price of 1p each (representing 3.0% of the
existing issued share capital and granted on the basis of 10
options for every pound of salary forgone) which will be
exercisable from 1 October 2021. No directors are receiving
options.
The trading environment has never been more uncertain. However,
with a strong balance sheet strengthened by the actions that we
have taken, we believe that we are well placed to weather the storm
and to continue to service our clients to the highest standard.
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Contacts
finnCap Group plc Tel: +44 (0) 20 7220 0500
Sam Smith, Chief Executive Officer
investor.relations@finncap.com
Tom Hayward, Chief Financial Officer
Grant Thornton (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Philip Secrett/Samantha Harrison/Seamus Fricker
finnCap Ltd (Broker) Tel: +44 (0) 20 7220 0500
Rhys Williams
Tim Redfern
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END
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