TIDMFCAP
RNS Number : 4500J
finnCap Group PLC
13 December 2022
13 December 2022
finnCap Group plc ("finnCap" or the "Company")
Interim Results for the six months ended 30 September 2022
Diversification Delivered - Performance remains in line with
management expectations
H1 23 Operational Overview
-- Diversification strategy continues to deliver with over 80%
of deal fees from non-ECM services
o Diversification has created a more resilient business - we are
no longer a traditional corporate broker
o Focus remains on building a sector-focused financial advisory firm
o Key services include: public and private M&A; public
equity advisory, fund raising and related activities; private
capital raising; and debt advisory
o Continue to make selective hires to strengthen capability
whilst managing the cost base cautiously
o Expansion into advisory areas outside our key service areas has been de-prioritised
-- Delivering for clients: 33 transactions in H1 23 with
aggregate deal value of GBP740m
o Raised c.GBP80m equity through 10 public market placings (H1
22: 14 deals; GBP250m raised)
o Advised on 11 private M&A deals with aggregate value of
c.GBP430 million (H1 22: 13; GBP1bn)
o Advised on 4 public company M&A deals with an aggregate
value of c.GBP75m (H1 22: 4; GBP500m)
o Completed 8 debt financing mandates raising c.GBP160m (H1 22:
6 deals raising c.GBP250m)
-- Controlling our costs
o Significant reduction in fixed cost base implemented from
September 2022
o FY24 fixed cost base substantially reduced to c.GBP28m from
c.GBP31.5m H123 run rate(2)
o Reduced discretionary spend and headcount reduction without
impacting client service levels
o Marketing of surplus office space under way, further savings
identified
-- Challenging operating environment
o UK equity issuance subdued since the invasion of Ukraine - H1
23 decline in AIM issuance of c.70%(3)
o Significant economic uncertainty with rising interest rates
and inflation impacting investor confidence
o Private and plc M&A activity has continued but deal
financing has become more challenging
H1 23 - Financial Highlights
o Total revenue GBP16.4m (H1 22: GBP31.7m) down 48% vs H1 22 our
record half year revenue performance
o finnCap Capital Markets revenue GBP9.3m (H122: GBP15.6m)
o finnCap Cavendish revenue GBP7.1m (H121: GBP16.1m) in line
with 5 year average HY level
o Adjusted PBT(1) of GBP(0.6)m (H1 22: Adjusted PBT of GBP7.2m);
PBT of GBP(2.6)m (H1 22: PBTGBP6.3m)
o Adjusted basic EPS:(1) (0.30)p (H1 22: 3.54p); Basic EPS:
(1.82)p (H1 22: 2.96p)
o Cash balance: GBP11.1m at 30 September 2022 (31 March 22:
GBP24.4m) post investment in Energise Limited; FY22 corporation tax
and FY22 discretionary compensation payments
Current Trading
-- Q3 trading remains in line with our full year expectations
-- Deal pipeline remains solid and continues to grow with equity
fund raisings, potential VCT eligible IPOs and private M&A
transactions scheduled to complete in the coming months
FY23 Interim and Full Year Dividends
o Board remains committed to paying attractive dividends to shareholders
o However, in light of the uncertain economic environment, no
interim dividend will be paid and the decision on dividends for
FY23 will be made in conjunction with the publication of FY23 final
results
Commenting on the results, John Farrugia, Chief Executive
Officer, said:
"Today's results demonstrate the resilience of our diversified
business model and that our strategy of building a broader-based
financial advisory firm has benefitted us during this sharp
downturn. We have delivered a good H1 private and public M&A
performance helping to offset the well publicised weakness in the
equity issuance market which is affecting all of our competitors.
Despite the challenging macro environment, our H1 results were in
line with our expectations and the Group continued to deliver for
clients executing 31 transactions with an aggregate value of
c.GBP700m .
It is likely that these adverse conditions will continue for
some time and we have therefore taken appropriate steps to reduce
our fixed operating cost base by managing discretionary spending
and reducing headcount across all functions of the firm to align it
with the opportunity we see ahead of us. These cost savings have
already been implemented and the Group is now re-set and focused on
building positive momentum.
Relative to H1, Q3 has begun well with the ECM team closing a
number of equity fund raisings, including for Xeros Technologies
and Surface Transforms, the completion of the acquisition of
Attraqt PLC and private M&A transactions including the sale of
Peach Pubs. Our pipeline of private M&A transactions remains
good and we currently have over 36 mandates signed and in various
stages of execution.
Given the uncertain operating environment, no interim dividend
will be paid and we will make a decision on a final dividend for
FY23 once we have completed the year and have greater clarity on
the outlook for the business and our industry in 2023."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. 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
John Farrugia, Chief Executive Officer
investor.relations@finncap.com
Richard Snow, Chief Financial Officer
Grant Thornton (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Philip Secrett/Samantha Harrison/George Grainger
Oberon Capital (Joint broker) Tel: +44 (0) 20 3179 5344
Mike Seabrook
finnCap Ltd (Joint Broker) Tel: +44 (0) 20 7220 0500
Rhys Williams / Tim Redfern
Hudson Sandler (PR adviser) Tel: +44 (0) 20 7796 4133
Dan de Belder/Rebekah Chapman
Notes to Editors
About finnCap Group
finnCap Group is a diversified financial advisory firm offering
a full range of services across M&A advice, equity and debt
capital raising and related services to corporate and institutional
clients and high net worth investors including private equity and
family offices. It has particular strength in the technology, life
sciences, consumer and business services sectors. finnCap Group has
global reach through its affiliation with the Oaklins partnership
and access to net zero and carbon economy consultancy through its
partnership with Energise Limited.
Notes: (1) Adjusted LBT, PBT and EPS are calculated excluding
share-based payments, amortisation of intangible assets from the
acquisition of Cavendish Corporate Finance LLP, non-recurring costs
and includes, for EPS, an adjustment to normalise tax. The weighted
average number of shares in issue during the period excludes shares
held by the Group's Employee Benefit Trust.
(2) Being total fixed employee costs (ie excluding IFRS 2
share-based payments charges and discretionary compensation) plus
non-employee costs.
(3) AIM placings >GBP5m per London Stock Exchange to 30
September 2022.
Diversity of services - a key strength in a challenging equity
environment
The operating environment in H1 2023 could not contrast more
sharply with H1 2022 - when we delivered our best ever half-yearly
results with strong revenues from both the ECM and M&A
teams.
Since the invasion of Ukraine, a combination of economic
uncertainty, sharply rising inflation and rising interest rates
have hit investor confidence and the volume of UK equity issuance -
our key driver of ECM revenues - which has fallen substantially
from recent, record levels. In H123, overall equity issuance on AIM
in H1 was c.GBP0.8bn (H122: GBP3.0bn) (source: London Stock
Exchange).
The Group's strategy of diversification into new products and
services, in particular the private M&A market through its
acquisition of Cavendish, coupled with our plc M&A franchise
and debt advisory team, means that we are continuing to bring in
good levels of revenue despite weakness in the equity issuance
market. We believe that, with c.90% of deal fees being earned
outside the core ECM business our performance in this period will
be comparatively better than our ECM focused peers.
Overall, we have been active for our clients executing 33
transactions with an aggregate deal value of GBP740m
(H1 22: 37 transactions with an aggregate value of GBP2bn).
Our balance sheet remains strong and in line with our liquidity
objective at the half year with the reduction from March's balance
being driven by payment of year-end discretionary compensation,
corporation tax and the Group's investment in Energise Limited.
Divisional performance - delivering for our clients
finnCap Capital Markets (ECM) generated GBP9.3m in H122 (H122:
GBP15.6m).
Retainers - Total fees from retainers in the period increased to
GBP3.5m (H122: GBP3.2m) driven by RPI adjustments to annual ECM
retainers. Client numbers were broadly stable at 118 (H1 22: 116)
with several new clients currently in our formal take-on
process.
Transactions - Total fees received from transactions in the
period were GBP3.9m (H122: GBP8.7m).
In the half year, finnCap Capital Markets raised over GBP70m (H1
22: GBP250m) across 11 (H1 22: 14) equity fundraisings for listed
clients. The plc advisory team completed 4 transactions with an
aggregate value of c.GBP80m and the debt advisory team, which works
across both finnCap Capital Markets and finnCap Cavendish,
completed 8 fund-raising mandates raising c.GBP160m and billing
over GBP0.6m in line with last year.
Trading - Trading revenues were GBP1.9m (H1 22: GBP3.7m),
reducing in line with the wider equity issuance markets, market
volumes and activity decreased during H1.
Despite this backdrop, our pipeline of potential transactions in
ECM remains good - with many of our clients needing to raise equity
to fund growth and strengthen their own balance sheets and
continued plc M&A activity where we have a strong franchise. In
ECM, deal fee revenue trends have been better than in H1 and,
although activity remains muted, we currently expect that ECM will
deliver an H2 revenue performance in line or slightly ahead of H1.
During H1 with lower ECM activity we have focused on client
service. Although M&A activity has been high on AIM, client
numbers remained stable in the period with 9 new client wins and
four currently in take on.
finnCap Cavendish (M&A) delivered another good half year
revenue performance closing 11 deals with an aggregate market value
of c.GBP430m and with average success fees of c.GBP600k, near to
our target level of GBP650k. As expected, this is well down on our
record half year in H1 22 but overall performance was in line with
5 year average revenue levels. Although the financing of deals is
currently more challenging than at the start of 2022, we see
continued buyer confidence - both trade and private equity - and
good competition for quality assets.
Overall finnCap Cavendish generated revenues of GBP7.1m (H1 22:
GBP16.1m). Activity levels remain good and given our good pipeline,
we currently expect that our H2 M&A revenue will be in line
with or ahead of our H1 performance.
Strategy - transition from ECM corporate broker to strategic
financial adviser complete
We remain committed to our strategy of broadening and deepening
our strategic financial advisory capabilities through development
of our in-house teams and selective hiring where appropriate. We
believe that this strategy - implemented over several years - has
created a business better capable of mitigating the cyclicality of
our original ECM focused corporate broking business model.
We will continue to deepen our sector-based approach to ensure
that we maximise our relevance to clients be they institutional,
private equity, corporate or high net worth individuals and
focusing on those clients where we can be best equipped to deliver
their objectives.
Whilst we will continue to consider potential M&A
opportunities we expect that these will be focused on businesses
and teams offering services within or directly adjacent to our
existing financial services advisory offering. In the medium term
we are unlikely to diversify away from this core focus and
currently are not actively considering any acquisition
opportunities.
Managing our costs for the current environment
After a period of strong revenue growth and investment in
people, we have seen the fixed cost base in the business - employee
costs excluding discretionary pay plus non-people operating
expenses - rise from c.GBP22.0m in FY20 to c.GBP31.5m(2) in FY23,
(annualising our H1 performance). This increase of c.50% is
substantially ahead of our growth in headcount at 30 September
(c.20%) and is driven by a number of factors including, high wage
inflation in our sector for client facing staff; the cost of the
Group's new property; higher corporate costs (eg insurance) and
investment in better IT systems to support sales and trading, CRM
and cyber risks.
With lower revenue and a more focused strategy, the Group
undertook a focused restructuring programme in September -
including both voluntary and mandatory redundancies - losing c.15
heads across all parts of the Group and at all levels. In addition,
we have reviewed and cut our discretionary spend, in particular
around marketing events and branding. We have also relocated teams
more effectively within our new offices and are in the process of
marketing surplus office space which should generate a further
saving in the next financial year without preventing us selectively
growing headcount when conditions permit.
In aggregate, we expect that the Group's fixed cost base(2) will
be reduced to c.GBP28m for FY24.
Overall, in H1, administrative expenses decreased by c.31%.
Employee benefit expense decreased by 41% and discretionary bonus
payments for H1 were very limited. Staff costs as a percentage of
revenue were c.67% reflecting the impact of much lower revenues
Non-employee costs in H1 were GBP5.7m (H1 22: GBP5.2m), up 10% -
in line with our expectations and guidance for FY23 and reflects,
in particular, higher IT costs (where software pricing inflation
and investment in cyber security have been key drivers) and travel
and marketing expenditure post the pandemic impacted period. Taking
into account the benefits of the cost reduction measures we have
taken in H1, we expect non-employee costs to be c.GBP10.5m
(excluding third-party introductory fees) for FY23.
Non staff costs per employee - a key efficiency measure - was
broadly stable at GBP36k (H1 22: GBP34k).
Energise full year revenues up 40%
Our joint venture Energise Limited ("Energise"), an energy
efficiency and net zero consultancy, in which the Group invested
c.GBP2m for a 50% interest in May, has completed its financial year
to 30 September 2022. Unaudited revenue was GBP1.5m up c.40% on the
prior year and Energise recorded a loss before taxation of cGBP0.3m
in line with our expectations and consistent with its strategy to
drive revenue growth through hiring consultants and driving client
growth over the next 3 years.
Non-recurring expenditure
In H1 we incurred c.GBP1.4m of non-recurring expenditure with
c.GBP1.2m for the headcount restructuring and CEO departure and
c.GBP0.2m of legal and advisory fees related to the potential
take-over with Panmure Gordon Group Limited which were mutually
terminated in November.
There are expected to be further non-recurring items in H2 as
certain of the employee settlements have been settled since the
half year end and payments under some of the arrangements are
contingent on a number of factors including mitigation clauses
related to terms of subsequent re-employment.
Capital and liquidity position in line with our target
The Group's cash position at 30 September 2022 was GBP11.1m with
the reduction from 31 March 2022 being driven by payment of
discretionary compensation for FY22, the FY22 corporation tax
liability, a basic fit out of our spare office space (making it
suitable for sub-letting) and our GBP2.1m investment in Energise
Limited. The underlying cash reduction was c.GBP1.3m. Cash is
stated before the GBP1.0m balance of the fit-out loan which is
payable in instalments over the next 3 years.
Maintaining a strong liquidity position and the longer-term
financing of our office move means that the Group is better able to
withstand challenging operating conditions such as those we are
currently experiencing.
Operating responsibly
In August we held our second The Side Hustle competition with
our partners ACCA and YourGamePlan providing the winning youth
entrepreneurs with funding to grow their businesses and active
mentoring by our corporate finance and marketing teams. We have
agreed to continue sponsoring this competition and supporting
YourGamePlan Limited with the creation and development of its
entrepreneurship education materials.
In terms of supporting our broader community:
- In May we sponsored ten Ukrainian refugees to gain English
language and UK accreditation through sponsorship of Refuaid - part
of the Ukraine Business Consortium.
- We continue to support the Whitechapel Mission (an East London
based charity that provides food, clothing and support for people
in need) through employee volunteering.
- We provided a team to implement an organised canal clean up in East London.
We have now operated our Employee Volunteer scheme for over 18
months. In FY23, Staff members have volunteered over 200 hours
acting as swimming judges, running winter coat collections, and
raising money for a wide variety of charities important to them. We
have also hosted client education events around ESG, targeting
NEDs, executives and investors focused on ESG reporting .
Rewarding shareholders
The Board recognises the importance of income to its
shareholders and intends to continue to pay attractive dividends
where appropriate and, in October 2022, the Group paid GBP2m to
shareholders as the final dividend for FY22.
However, given the uncertain operating environment, no interim
dividend for FY23 will be paid and the decision on dividends for
the current financial year will be taken with the publication of
the Group's full year results.
Q3 Trading and Outlook
The equity issuance market remains subdued with investors being
highly selective about deal participation and pricing. Trading
volumes are also muted. However, in a very quiet market, we have
completed two sizeable offerings in H2 including for Xeros
Technologies plc and Surface Transforms PLC. Overall ECM deal fees
are already at around 50% of those recorded in H1. In the context
of this environment, our ECM performance has been good and the
pipeline is in good shape.
Activity in the M&A market remains favourable albeit debt
financing for larger private equity deals is more challenging. The
M&A pipeline remains good and we currently have 36 mandates at
various stages of execution. Revenue is building well and we expect
H2 M&A revenue to exceed H1.
With a more efficient cost base and a solid balance sheet we are
well placed to deliver a result for FY23 in line with our
expectations and are confident in the long-term prospects for the
Group.
John Farrugia
Chief Executive Officer
13 December 2022
Consolidated Statement of Comprehensive Income
Unaudited for the 6 months ended 30 September 2022
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Notes
Revenue 2 16,352 31,687 52,545
Other operating (loss)/income 3 (138) (26) 13
----------------------------------- ------ ------------- ------------- ----------
Total income 16,214 31,661 52,558
Administrative expenses 4 (17,057) (25,120) (43,941)
----------------------------------- ------ ------------- ------------- ----------
Operating (loss)/profit
before non-recurring items (843) 6,541 8,617
Non-recurring items 5 (1,444) - -
Operating (loss)/profit (2,287) 6,541 8,617
Finance income 22 6 12
Finance charge (242) (265) (524)
Share of joint venture loss (85) - -
----------------------------------- ------ ------------- ------------- ----------
(Loss)/Profit before taxation (2,592) 6,282 8,105
Taxation (487) (1,484) (1,594)
(Loss)/Profit attributable
to equity shareholders (3,079) 4,798 6,511
----------------------------------- ------ ------------- ------------- ----------
Total comprehensive (loss)/income
for the period (3,079) 4,798 6,511
----------------------------------- ------ ------------- ------------- ----------
Consolidated Statement of Financial Position
Unaudited as at 30 September 2022
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant
and equipment 12,518 13,833 13,304
Intangible assets 13,514 13,372 13,512
Investment in joint
venture 2,218 - -
Financial assets
held at fair value 729 635 802
8
Deferred tax asset i) 133 888 620
Total non-current
assets 29,112 28,728 28,238
------------------------------------ ------------- ------------- ---------
Current assets
Trade and other 8
receivables ii) 11,186 12,725 13,074
Current assets
held at fair value 213 967 871
Cash and cash equivalents 11,124 22,588 24,435
Total current
assets 22,523 36,280 38,380
------------------------------------ ------------- ------------- ---------
Total assets 51,635 65,008 66,618
------------------------------------ ------------- ------------- ---------
Non-Current liabilities
Lease liability 10,829 13,876 11,151
Borrowings 667 1,037 851
Provisions 30 261 94
------------------------------------
Total non-Current
liabilities 11,526 15,174 12,096
------------------------------------ ------------- ------------- ---------
Current liabilities
Trade and other
payables 9,122 15,158 20,389
Corporation taxation - 1,600 714
Borrowings 364 343 356
Total current
liabilities 9,486 17,101 21,459
------------------------------------ ------------- ------------- ---------
Equity
Share capital 1,811 1,779 1,799
Share premium 1,716 1,355 1,475
8
Own shares held iii) (1,926) (1,726) (1,926)
8
Merger relief reserve iv) 10,482 10,482 10,482
EBT Reserve (338) - (322)
Share based payments
reserve 1,588 1,964 1,294
Retained earnings 17,290 18,879 20,261
Total equity 30,623 32,733 33,063
------------------------------------ ------------- ------------- ---------
Total equity and
liabilities 51,635 65,008 66,618
------------------------------------ ------------- ------------- ---------
Consolidated Statement of Cash Flows
Unaudited for the 6 months ended 30 September 2022
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
(Loss)/Profit before taxation (2,592) 6,282 8,105
Adjustments for:
Depreciation 891 845 1,739
Amortisation of intangible
assets 31 74 83
Finance income (22) (6) (12)
Finance charge 242 265 524
Share based payments charge 386 832 1,100
Net fair value gains/(loss)
recognised in profit or loss 138 26 (55)
Payments received for non-cash
assets (15) - (448)
(941) 8,318 11,036
Changes in working capital:
(Increase)/Decrease in trade
and other receivables 1,888 (4,945) (5,292)
(Decrease)/Increase in trade
and other payables (10,420) 1,008 4,456
(Decrease)/Increase in provisions (64) 166 (1)
Cash (outflow)/inflow generated
from operations (9,537) 4,547 10,199
Net cash receipts/(payment)s
for current asset investments
held at fair value through
profit or loss 658 (1,039) (943)
Tax paid (1,141) (632) (1,628)
Net cash (outflow)/inflow
from operating activities (10,020) 2,876 7,628
----------------------------------- ------------- ------------- ----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (112) (74) (454)
Purchase of intangible assets (25) (46) (182)
Investment in Joint Venture (2,022) - -
Proceeds on sale of investments - 1,186 1,515
Interest received 22 6 12
Net cash (outflow)/inflow
from investing activities (2,137) 1,072 891
----------------------------------- ------------- ------------- ----------
Cash flows from financing
activities
Equity dividends paid - (1,638) (2,639)
Proceeds from exercise of
options 3 441 581
Purchase of own shares - - (843)
Interest paid (21) (27) (51)
Lease liabilities payments (960) (400) (1,223)
Net repayment of borrowings (176) (170) (343)
Net cash outflow from financing
activities (1,154) (1,794) (4,518)
----------------------------------- ------------- ------------- ----------
Net (decrease)/increase in
cash and cash equivalents (13,311) 2,154 4,001
Cash and cash equivalents
at beginning of period 24,435 20,434 20,434
Cash and cash equivalents
at end of period 11,124 22,588 24,435
----------------------------------- ------------- ------------- ----------
Reconciliation of net debt
Net increase in cash and
cash equivalents (176) (170) (343)
Borrowings at beginning of
period 1,207 1,550 1,550
----------------------------------- ------------- ------------- ----------
Borrowings at end of period 1,031 1,380 1,207
----------------------------------- ------------- ------------- ----------
Consolidated Statement of Changes in Equity
Unaudited for the 6 months ended 30 September 2022
Share
Own Merger Based
Share Share Shares EBT Relief Payment Retained Total
Capital Premium Held Reserve Reserve Reserve Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2021 1,737 956 (1,726) - 10,482 1,132 15,719 28,300
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Total comprehensive income
for the period - - - - - - 4,798 4,798
Transactions with owners:
Share based payments
charge - - - - - 832 - 832
Dividends - - - - - - (1,638) (1,638)
Share options exercised 42 399 - - - - - 441
42 399 - - - 832 (1,638) (365)
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Balance at 30 September
2021 1,779 1,355 (1,726) - 10,482 1,964 18,879 32,733
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Total comprehensive income
for the period - - - - - - 1,713 1,713
Transactions with owners:
Share based payments
charge - - - - 268 - 268
Deferred tax on share-based
payments - - - - - (268) (268)
Purchase of shares - - (843) - - - (843)
EBT Gift - - - 100 - - - 100
Dividends - - - - - (1,001) (1,001)
Share options exercised 20 120 643 (422) - (938) 938 361
20 120 (200) (322) - (670) (331) (1,383)
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Balance at 31 March
2022 1,799 1,475 (1,926) (322) 10,482 1,294 20,261 33,063
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Total comprehensive loss
for the period - - - (16) - - (3,063) (3,079)
Transactions with owners:
Share based payments
charge - - - - - 386 - 386
Investment in Join Venture 9 241 - - - - - 250
Share options exercised 3 - - - - (92) 92 3
12 241 - - - 294 92 639
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Balance at 30 September
2022 1,811 1,716 (1,926) (338) 10,482 1,588 17,290 30,623
----------------------------- -------- -------- -------- -------- -------- -------- --------- --------
Notes to the Financial Statements
Unaudited for the 6 months ended 30 September 2022
1. Basis of preparation
finnCap Group plc (the "Company" and together with its
subsidiaries, the "Group") is a public limited company, limited by
shares, incorporated and domiciled in England and Wales. The
Company was incorporated on 28 August 2018. The registered office
of the Company is at 1 Bartholomew Close, London EC1A 7BL, United
Kingdom. The registered company number is 11540126. The Company is
listed on the AIM of the London Stock Exchange.
These unaudited consolidated Interim Financial Statements have
been prepared in accordance with AIM Rule 18. The financial
information contained in the Interim Financial Statements is
unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006.
The statutory accounts for the 12 months ended 31 March 2022
have been delivered to the Registrar of Companies. The statutory
accounts have been prepared in accordance with International
Financial Reporting Standards and International Accounting
Standards as adopted by the European Union and the IFRS
Interpretation Committee interpretations (collectively IFRSs), and
in accordance with applicable law. The Independent Auditor's Report
to the members of finnCap Group plc contained no qualification or
statement under section 498 (2) or (3) of the Companies Act
2006.
These consolidated Interim Financial Statements contain
information about the Group and have been prepared on a historical
cost basis except for certain financial instruments which are
carried at fair value. Amounts are rounded to the nearest thousand,
unless otherwise stated and are presented in pounds sterling, which
is the currency of the primary economic environment in which the
Group operates.
The preparation of these Interim Financial Statements requires
the use of certain critical accounting estimates. It also requires
Group management to exercise judgement in applying the Group's
accounting policies. Judgements and estimates used in these Interim
Financial Statements have been applied on a consistent basis with
those use in the statutory accounts for the 12 months ended 31
March 2022.
The Directors believe that the Company has adequate resources to
continue trading for at least 12 months from the date of approval
of this report. Accordingly, they continue to adopt the going
concern basis in preparing the Interim Financial Statements.
2. Segmental reporting
The Group is managed as an integrated full-service financial
services group and the different revenue streams are considered to
be subject to similar economic characteristics. Consequently, the
Group is managed as one business unit.
The trading operations of the Group comprise of Corporate
Advisory and Broking, Private M&A Advisory and Institutional
Stockbroking. The Group's revenues are derived from activities
conducted in the UK, although several of its corporate and
institutional investors and clients are situated overseas. All
assets of the Group reside in the UK.
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenues
Retainers 3,452 3,173 6,615
Transactions 3,912 8,688 15,767
Institutional Stockbroking 1,917 3,696 5,903
Total ECM 9,281 15,557 28,285
Private M&A advisory 7,071 16,130 24,260
Total Revenue 16,352 31,687 52,545
----------------------------- ------------- ------------- ----------
Services transferred at
a point in time 12,100 27,254 43,462
Services transferred over
a period of time 4,252 4,433 9,083
Total Revenue 16,352 31,687 52,545
----------------------------- ------------- ------------- ----------
3. Other operating income
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Other operating income (138) (26) 13
------------------------- ------------- ------------- ----------
4.
4. Expenses by nature
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Employee benefit expense 11,329 19,958 33,081
Non-employee costs 5,728 5,162 10,860
Total administrative expenses 17,057 25,120 43,941
-------------------------------- ------------- ------------- ----------
Total number of employees 161 135 165
-------------------------------- ------------- ------------- ----------
Employee benefit expense includes share-based payments which
decreased to GBP386k (H1 22: GBP832k).
5. Non-recurring items
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-recurring items 1,444 - -
-------------------- ------------- ------------- ----------
Non-recurring items in the period relate to group restructuring
costs and legal and professional fees in connection with the
aborted acquisition of the group by Panmure Gordon Group
Limited.
6. Earnings per share
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Earnings per share
Number of shares
Weighted average number
of shares for the purposes
of basic earnings per share 169,041,783 162,321,463 164,699,708
------------------------------ ------------- ------------- ------------
Weighted average dilutive
effect of conditional share
awards 3,011,648 18,941,586 17,546,548
------------- ------------- ------------
Weighted average number
of shares for the purposes
of diluted earnings per
share 172,053,431 181,263,049 182,246,256
------------------------------ ------------- ------------- ------------
Profit per ordinary share
(pence)
Basic (loss)/profit per
ordinary share (1.82) 2.96 3.95
Diluted (loss)/profit per
ordinary share (1.79) 2.65 3.57
------------------------------ ------------- ------------- ------------
The shares held by the Group's Employee Benefit Trust have been
excluded from the calculation of earnings per share.
7.
7. Dividends
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Dividends proposed and paid
during the year - 1,638 2,639
------------------------------ -------------- ------------- ---------
Dividends per share - 1.00p 1.60p
------------------------------ -------------- ------------- ---------
8. Balance sheet items
i) Deferred tax asset
Deferred taxation for the group relates to timing difference on
the taxation relief on the exercise of options. The amount of the
asset is determined using tax rates that have been enacted or
substantively enacted when the deferred tax assets are expected to
be recovered.
ii) Trade and other receivables
Trade and other receivable principally consist of amounts due
from client, brokers and other counterparties. In addition, the
Company has credit risk exposure to the gross value of unsettled
trades (on a delivery versus payment basis) at its agency
settlement agent (Pershing, a wholly owned subsidiary of Bank of
New York Mellon Corporation)
iii) Own shares held
The value of own shares held is the cost of shares purchased the
Group's Employee Benefit Trust. The Trust was established with the
authority to acquire shares in finnCap Group plc and is funded by
the Group.
iv) Merger relief reserve
The merger relief reserve represents:
-- the difference between net book value of finnCap Ltd and the
nominal value of the shares issued due to the share for share
exchange on the acquisition of finnCap Ltd. Upon consolidation,
part of the merger reserve is eliminated to recognise the
pre-acquisition share premium and capital redemption reserve of
finnCap Ltd; and
-- the difference between the fair value and nominal value of
shares issued for the acquisition of Cavendish Corporate Finance
(UK) Limited and Cavendish Corporate Finance LLP
This reserve is not distributable
9. Alternative performance measures
The below non-GAAP alternative performance measures have been
used.
Adjusted earnings per share and profit before tax
Measure: Adjusted earnings per share is calculated excluding
share-based payments, non-recurring items, amortisation of
intangible assets from the acquisition of Cavendish and includes a
nominal tax charge adjustment. As with earnings per share, the
weighted average number of shares in issue during the period
excludes shares held by the Group's Employee Benefit Trust.
Use: Provides a consistent measure of the earnings performance
of the core business activities.
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
(Loss)/profit
attributable
to equity
shareholders (3,079) 4,798 6,511
Fair value gains
on long
term investments 138 26 -
Non-recurring
items 1,444 - -
Share based
payments 386 832 1,100
Amortisation - 39 84
Taxation 612 48 (264)
------------------ -------------------------------------- ----------------------------------- -------------------------------
Adjusted earnings (499) 5,743 7,431
------------------ -------------------------------------- ----------------------------------- -------------------------------
Basic shares 169,041,783 162,321,463 164,699,708
Earnings per
share (basic) (1.82) 2.96 3.95
------------------
Adjusted
(loss)/earnings
per share
(basic) (0.30) 3.54 4.51
------------------ -------------------------------------- ----------------------------------- -------------------------------
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
(Loss)/profit before tax (2,592) 6,282 8,105
Fair value gains on long
term investments 138 26 -
Non-recurring items 1,444 - -
Share based payments 386 832 1,100
Amortisation - 39 84
Adjusted (loss)/profit
before tax (624) 7,179 9,289
--------------------------- ------------- ------------- ----------
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END
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December 13, 2022 02:00 ET (07:00 GMT)
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