Interim results and interim dividend

RNS Number : 4475U

finnCap Group PLC

25 November 2019

 

finnCap Group plc ("finnCap" or "the Company")

Interim results for the six months ended 30 September 2019
and
interim dividend

finnCap Group plc (AIM:FCAP), together with its subsidiaries the "Group", today announces its unaudited interim results for the six months ended 30 September 2019.

Financial highlights:

·     Turnover of £14.2m (5 months to 30 September 2018: £9.1m)

o  Equity Capital Markets division turnover £9.2m (5 months to 30 September 2018: £9.1m)

o  M&A division turnover £5.0m (5 months to 30 September 2018: £nil)

·     Pre-tax profit £1.4m (5 months to 30 September 2018: £1.4m)

·     Adjusted EPS of 0.76p per share*

·     Interim dividend of 0.42p per share

·     Cash of £5.1m (31 Mar 2019: £4.7m)

Operational highlights:

·     Completed 29 transactions across a broad range of sectors and service lines, with total deal and advisory fees of £9.2m (5 months to 30 September 2018: £4.7m)

·     Won 12 new retained corporate clients, with 131 retained clients at 22 November 2019

·     Average monthly retainer fees of £529k (5 months to 30 September 2018: £520k)

·     Completed 8 sale mandates across 5 sectors, for a variety of owner-managed businesses and subsidiaries of public companies

·     Signed up 19 new M&A division mandates

·     Executed or currently mandated on 8 plc bid or advisory mandates for clients outside our retained client base

·     Continued to hire in to existing teams and to develop new teams

The comparable figures throughout this announcement are for the five-month period from 1 May 2018 to 30 September 2018 because of a change in year-end, and only include the performance of finnCap Ltd as this period was before the acquisition of Cavendish Corporate Finance.

Commenting on the results, Sam Smith, Chief Executive Officer, said:

"The period has seen some very testing market conditions, ongoing domestic political uncertainty and turbulent macro-economic headwinds affecting equities globally. The Group now has a more diversified revenue stream following our acquisition of Cavendish Corporate Finance in December 2018 and we remain excited about continuing to build a financial services business for growth companies."

Contacts

finnCap Group plc                                                                            Tel: [phone]

Sam Smith, Chief Executive Officer                                                [e-mail]

Tom Hayward, Chief Financial Officer

Grant Thornton (Nominated Adviser)                                          Tel: [phone]

Philip Secrett/Samantha Harrison/Seamus Fricker

finnCap Ltd (Broker)                                                                        Tel: [phone]

Rhys Williams / Tim Redfern

Sapience Communications (PR adviser to the Group)             Tel: [phone]

Richard Morgan Evans

Notes to Editors

About finnCap Group

finnCap Group plc provides financial services to growth companies. It provides advisory, broking and research services to 131 companies on AIM and on the London Stock Exchange Main Board as well as trading services to a broad range of institutional investors. It also advises on specialist M&A, debt advisory and private company fundraisings with a specialism in sell-side M&A. Together, finnCap and its subsidiaries have helped raise £3bn of new capital to support their clients and advised on the sale of over 600 companies.

About Oaklins

Oaklins is a global advisory organisation of which Cavendish Corporate Finance is a member, providing M&A, growth equity and ECM, debt advisory and corporate finance advisory services, with over 700 dedicated professionals covering 15 industries in 40 countries.

* Adjusted EPS is calculated excluding share-based payments (£79k), amortisation of intangible assets from the acquisition of Cavendish (£59k) and includes a nominal tax charge adjustment (£9k). The weighted average number of shares in issue during the period excludes shares held by the Group's Employee Benefit Trust.

 

Business review

The six-month period has seen a number of macro-economic headwinds and structural issues that have made market conditions in the Group's traditional equity capital markets business tougher. UK Equity markets have lacked direction and the future relationship of the UK and EU has dominated the political agenda. As a result of this we have seen the lowest level of public capital markets activity for a number of years with net cash outflows from the UK equity markets and a greater focus on liquidity following the demise of Woodford Investment Management.

The effects of these factors have been particularly evident on AIM, with the total value of issuances for the nine months to 30 September 2019 down 39% compared to the prior year period and the number of new issues 59% lower (7 IPOs year to date). Trading volumes in core UK stocks has also been noticeably lower with the number of trades down 8% year to date on AIM and the value traded down 19%. Given these factors, we are pleased that the Group's Slide Rule Fund has delivered +7.49% between 1 January and 30 September, outperforming benchmark by 385bps.

As a Group we now earn a higher proportion of our revenues from outside traditional equity capital market activities: from our growing mandates in public market M&A technical advice, sell-side and buy-side advice, debt raising and refinancing, and private fundraisings. Our sell-side focused M&A activities have been largely unaffected by the political backdrop and the performance in the first half was in line with expectations at the time of the acquisition of Cavendish Corporate Finance. Overall, the Group's results are encouraging.

Equity Capital Markets

Given the market backdrop noted above the equity capital markets division of the Group has performed satisfactorily with total turnover for the six months of £9.2m (5 months to 30 September 2018: £9.1m).

Retainers - total fees from retainers were £3.2m (5 months to 30 September 2018: £2.6m) with an average monthly retainer revenue of £529k (5 months to 30 September 2018: £520k) and, as at the date of this announcement, a run rate of £548k. During the period we won 12 new clients. However, the number of clients (127) remained the same during the period reflecting a number that were lost mainly as a result of acquisition or delisting in the period. We have won 6 further clients since period end. We believe that the clients we win provide a solid base for future financial performance.

Transactions - total transaction and advisory fees in the period were £4.3m (5 months to 30 September 2018: £4.7m) and we acted on fundraisings totalling over £100m for our corporate clients, reflecting the tough market backdrop. This was made up for to an extent by a relatively high level of advisory fees from our existing clients as they have undertaken corporate activity or have been the subject of bids.

We had a quiet period on the investment company side after a strong performance in the last financial year and completed one private company fundraising for Parsley Box. We are very encouraged by the high level of activity within the PLC strategic advisory business working on behalf of non-retained clients, accounting for approximately £1.0m of total fees and where the pipeline remains strong. Notable equity capital markets transactions included:

·     Placing of £7.5m for Iofina PLC

·     Placing of £18.0m for Angle PLC

·     Placing of £16.0m for Independent Oil & Gas plc

·     Rule 3 advice to FFI Holdings PLC on its £39.5m recommended offer from 777 Group

·     Advising a consortium on its refinancing of 7digital Group plc

·     Rule 3 advice to SCISYS Group PLC on its £79m recommended offer from CGI Inc.

·     Raising of £3m of private growth capital for Parsley Box Limited

Trading - trading revenues of £1.8m (5 months to 30 September 2018: £1.8m) have improved from £1.6m in the second half of last year despite reduced volumes in the public markets. This reflects a core focus on providing liquidity in our corporate client list where there have been a number of secondary sell-downs. We were delighted to initiate Retail Service Provider trading with Barclays Capital, the largest RSP in the marketplace, during the period. Having started market making in 2013, finnCap now makes markets in 177 stocks.

M&A Advisory

As set out above, the headwinds in the equity capital markets division have not affected the M&A advisory business and the division has performed in line with the Board's expectations when it was acquired in December 2018, generating revenues of £5.2m. During the period 8 transactions were completed as detailed below with a mix of entrepreneurs and quoted company sellers, including:

·     The sale of three subsidiaries of Centaur Media PLC to separate purchasers

·     The sale by WPP and management of The Farm Group to Picture Head

·     The acquisition of Java Republic by Cafento

·     The sale by Naked Wines of Lay & Wheeler to Coterie Limited

·     The sale of Avicenna Holdings to Juno Health

Revenues from deal retainers on new mandates were £747k which is a run rate of 41% higher than the previous period. This represents a significant pipeline for the division, albeit that a deal can take over 12 months to complete. We were also instructed on a buy-side mandate.

We are looking to add three sector specialist partners to further develop our capabilities in the Technology, Business Services and Industrials sectors. The Group has recruited a new director and two new assistant directors, to expand execution capacity and enable others to focus on origination.

Progress on business combination

The Group continues to develop the revenue synergies from the business combination in December 2018, and notable progress includes:

·     The debt team, which previously performed lender education for sell-side mandates and raised debt for private companies, has been expanded to a team of three who are aiming to provide services to the Group's existing client base as well as its historic services. The team are winning mandates and are currently executing two transactions on behalf of quoted companies as well as providing a point of differentiation in winning new retained clients

·     We have two sale mandates on behalf of public companies that are retained clients of the ECM division

·     The introduction of several opportunities from Oaklins

·     The ability to offer dual track mandates

The Group's combination of services is attractive to a number of markets and we have appointed an individual to oversee private equity sponsor coverage and develop our relationships in the private equity community. We also continue to focus on improving our ability to track leads more efficiently and to market our services efficiently by investing further in our Client Relationship Management system and the individuals to run it.

Administrative expenses

Costs increased compared to the comparable period as a result of the longer period duration, the cost base assumed from the acquisition of Cavendish, and the additional costs of being a public company. In addition, during the period we continued to invest in existing sectors, new services (including debt) and in the infrastructure to allow us to scale in the future. A substantial proportion of this investment represents the hiring of key individuals and we expect to continue this. The key operating costs of the business are analysed as:

·      Staff Costs (including bonuses) £8.9m

·      Data, IT and Settlement £1.5m

·      Property £0.7m

·      Depreciation and Amortisation £0.2m

·      Other £1.6m

Capital and liquidity

The Group retained cash and cash equivalents of £5.1m as at 30 September 2019 (31 March 2019: £4.7m). The increase in cash represents £1.7m of cash generated from operations before working capital movements, a net working capital outflow of £0.9m reflecting the bonus payments related to the prior year offset by a reduction in debtors, a reduction in the net market making book of approximately £0.6m and receipt of cash from the sale of shares of £0.5m received as part payment of fees offset by the payment of tax (£0.5m), dividends (£0.6m) and rent (£0.4m).

The Group has implemented IFRS 16 for the current period, resulting in an increase in the carrying value of Property, Plant and Equipment, and a corresponding creditor. However, as both of the Group's office leases are into their last year, the impact on both the Consolidated Statement of Financial Position and the Consolidated Statement of Comprehensive Income is not material. The Group is continuing to evaluate its premises needs for the future.

Dividend

In line with the dividend policy disclosed in the AIM admission document published on 29 November 2018, the Board intends to pay an interim dividend of 0.42p per share on 8 January 2019 with an associated record date of 20 December 2019 and ex-dividend date of 19 December 2019.

Current trading and outlook

The current trading environment is very difficult which reflects the market environment referred to earlier being further affected by the normal slow-down in activity associated with an upcoming general election. Since the period end the Group has continued to close transactions and win business and has:

·      Completed the sale of Blayhall Professional to IRIS Software Group

·      Signed up 6 new retained corporate clients

·      Closed fundraisings for Access Intelligence, Xeros and Avacta

In our trading update of 8 October 2019, we reported that the Group was well-positioned to meet its full year expectations. At the time of writing we continue to have a pipeline of opportunities that supports a satisfactory outcome to the year but would caution that our ability to execute on this is subject, in our view, to the result of the general election and to market conditions for equity fundraisings returning to a normal level. Within the ECM division there are a limited number of transactions that are not wholly reliant on equity capital fundraisings, alongside a healthy pipeline of PLC strategic advisory work for both retained clients and one-off mandates. On the M&A advisory side the pipeline is strong, and the level of retainers paid is at a high level compared to prior periods although the outturn for this business is reliant on a number of higher value transactions. We cannot control these external factors, but we are confident that our ability to generate a variety of smaller fees from different service lines stands the business in good stead while conditions remain difficult.

Whilst we are mindful of the short-term headwinds we continue to focus on the longer term for the Group where over the last 12 months we have diversified from the Company's almost total reliance on public market activity to one where a good proportion of the Group's revenues are expected to come from outside this area. The Board expects to continue to invest in quality people to grow organically as well as to explore further opportunities to grow in both the financial services sector and wider professional services to complement our existing activities.

Sam Smith

Chief Executive Officer

25 November 2019

 

Consolidated Statement of Comprehensive Income

					6 months ended		5 months ended		11 months ended
				30 September 2019		30 September 2018		31 March 2019
					Unaudited		Unaudited		Audited
				Note	£'000		£'000		£'000
Revenue				2	14,182		9,115		24,516
Other operating income					25		4		14
Total income					14,207		9,119		24,530
Administrative expenses				3	(12,857)		(7,772)		(20,264)
Operating profit before non-recurring items					1,350		1,347		4,266
Non-recurring items					-		-		(1,095)
Operating profit					1,350		1,347		3,171
Finance income					13		12		28
Profit before taxation					1,363		1,359		3,199
Taxation					(276)		(258)		(875)
Profit attributable to equity shareholders					1,087		1,101		2,324
Total comprehensive income for the year					1,087		1,101		2,324
Earnings per share (pence)
Basic				4	0.68		0.93		1.85
Diluted				4	0.63		0.86		1.65

 

Consolidated Statement of Financial Position

				30 September 2019		30 September 2018		31 March 2019
					Unaudited		Unaudited		Audited
				Note	£'000		£'000		£'000
Non-current assets
Property, plant and equipment				6 i)	1,126		279		487
Intangible assets				6 ii)	13,593		232		13,644
Financial assets held at fair value					476		388		691
Deferred tax asset				6 iii)	365		-		428
Total non-current assets					15,560		899		15,250
Current assets
Trade and other receivables				6 iv)	7,757		11,098		8,541
Current assets held at fair value					533		1,457		1,111
Cash and cash equivalents					5,056		1,250		4,659
Total current assets					13,346		13,805		14,311
Total assets					28,906		14,704		29,561
Non-Current liabilities
Provisions					58		74		63
Current liabilities
Trade and other payables					7,061		7,169		8,065
Corporation taxation					256		444		498
Borrowings				6 v)	-		944		-
Total current liabilities					7,317		8,557		8,563
Equity
Share capital					1,697		1,184		1,688
Share premium					616		784		575
Capital redemption reserve					-		452		-
Own shares held				6 vi)	(1,636)		(1,936)		(1,636)
EBT reserve					-		(62)		-
Merger relief reserve				6 vii)	10,482		-		10,482
Share based payments reserve					371		305		292
Retained earnings					10,001		5,346		9,534
Total equity					21,531		6,073		20,935
Total equity and liabilities					28,906		14,704		29,561

 

Consolidated Statement of Cash Flows

		6 months ended		5 months ended		11 months ended
	30 September 2019		30 September 2018		31 March 2019
		Unaudited		Unaudited		Audited
Cash flows from operating activities		£'000		£'000		£'000
Profit before taxation		1,363		1,359		3,199
Adjustments for:
Depreciation		495		88		242
Amortisation of intangible assets		59		16		56
Finance income		(13)		(12)		(28)
Share based payments charge		79		44		100
Net fair value gains recognised in profit or loss		(38)		-		(155)
Payments received of non-cash assets		(224)		-		(218)
		1,721		1,495		3,196
Changes in working capital:
Decrease/(increase) in trade and other receivables		784		(1,856)		778
(Decrease)/increase in trade and other payables		(1,659)		266		109
Increase/(decrease) in provisions		(5)		1		(10)
Cash generated from operations		841		(94)		4,073
Net cash payments for current asset investments
held at fair value through profit or loss		578		(811)		(465)
Tax paid		(518)		(112)		(796)
Net cash inflow from operating activities		901		(1,017)		2,812
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired		-		-		(3,592)
Purchase of property, plant and equipment		(99)		(39)		(249)
Purchase of intangible assets		(9)		(11)		(30)
Proceeds on sale of investments		477		-		70
Interest received		(13)		12		28
Net cash (outflow)/inflow from investing activities		356		(38)		(3,773)
Cash flows from financing activities
Purchase of own shares by EBT		-		(1,260)		(1,260)
Sale of own share by EBT		-		-		693
Equity dividends paid		(557)		(1,181)		(1,635)
Proceeds from the issue of new shares net of costs		-		-		3,665
Proceeds from exercise of options		50		20		375
Lease liabilities payments		(353)		-		-
Proceeds from borrowings		-		205		(739)
Net cash outflow from financing activities		(860)		(2,216)		1,099
Net increase/(decrease) in cash and cash equivalents		397		(3,271)		138
Cash and cash equivalents at beginning of year		4,659		4,521		4,521
Cash and cash equivalents at end of year		5,056		1,250		4,659

 

Consolidated Statement of Changes in Equity

			Capital	Own		Merger	Share Based
	Share	Share	Redemption	Shares	EBT	Relief	Payment	Retained	Total
	Capital	Premium	Reserve	Held	Reserve	Reserve	Reserve	Earnings	Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2018	1,180	768	452	(676)	(54)	-	247	5,418	7,335
Total comprehensive income for the period	-	-	-	-	(8)	-	-	1,109	1,101
Transactions with owners:
Transfer of own shares	-	-	-	(1,260)	-	-	-	-	(1,260)
Share based payments charge	-	-	-	-	-	-	58	-	58
Dividends	-	-	-	-	-	-	-	(1,181)	(1,181)
Share options exercised	4	16	-	-	-	-	-	-	20
	4	16	-	(1,260)	-	-	58	(1,181)	(2,363)
Balance at 30 September 2018	1,184	784	452	(1,936)	(62)	-	305	5,346	6,073
Total comprehensive income for the period	-	-	-	-	62	-	-	1,161	1,223
Transactions with owners:
Transfer of own shares	-	-	-	300	-	-	-	-	300
Issue of share capital	134	3,616	-	-	-	-	-	-	3,750
Share issue costs	-	(85)	-	-	-	-	-	-	(85)
Shares issued as part of the
consideration in a business combination	334	-	-	-	-	9,019	-	-	9,353
Elimination in share for share acquisition	-	(1,011)	(452)	-	-	1,463	-	-	-
Share premium cancellation		(3,048)	-	-	-	-	-	3,048	-
Share based payments charge	-	-	-	-	-	-	42	-	42
Deferred tax on share based payments	-	-	-	-	-	-	-	378	378
Dividends	-	-	-	-	-	-	-	(454)	(454)
Share options exercised	36	319	-	-	-	-	(55)	55	355
	504	(209)	(452)	300	-	10,482	(13)	3,027	13,639
Balance at 31 March 2019	1,688	575	-	(1,636)	-	10,482	292	9,534	20,935
Total comprehensive income for the period	-	-	-	-	-	-	-	1,087	1,087
Transactions with owners:
Share based payments charge	-	-	-	-	-	-	79	-	79
Deferred tax on share based payments	-	-	-	-	-	-	-	(63)	(63)
Dividends	-	-	-	-	-	-	-	(557)	(557)
Share options exercised	9	41	-	-	-	-	-	-	50
	9	41	-	-	-	-	79	(620)	(491)
Balance at 30 September 2019	1,697	616	-	(1,636)	-	10,482	371	10,001	21,531

 

Notes to the Financial Statements

Unaudited for the 6 months ended 30 September 2019

1.    Basis of preparation

finnCap Group plc (the "Company") 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 60 New Broad Street, London, EC2M 1JJ, United Kingdom. The registered company number is 11540126. The Company is listed on the AIM market of the London Stock Exchange.

The Interim Financial Statements comparatives include the performance of finnCap Ltd for 11 months (due to the alignment of year ends), and for Cavendish for just under four months (since the date of its acquisition). The 5 months ended 30 September 2018 include only the results of finnCap Ltd as this period was before the formation of the Group.

These 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 11 months ended 31 March 2019 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 used in the statutory accounts for the 11 months ended 31 March 2019.

The Directors believe that the company has adequate resources to continue trading for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Interim Financial Statements.

The Group adopted IFRS 16 using the modified retrospective approach, with recognition of transitional adjustments on the date of initial application (1 April 2019), without restatement of comparative figures. On adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities in relation to leases of office space, which had previously been classified as operating leases. The Group has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate as at 1 April 2019. The Group's incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. A right-of-use asset and lease liability of £1,034k were recognised at 1 April 2019. The current period includes depreciation of £354k that would have been recognised as an operating lease expense in the prior period.

2.    Segmental reporting

The Group is managed as an integrated full-service financial services group and the different revenue streams are considered to have similar financial characteristics. Consequently, the Group is managed as one business unit.

The trading operations of the Group comprise of Corporate Advisory and Broking, M&A Advisory and Institutional Stockbroking. The Group's revenues are derived from activities conducted in the UK. All assets of the Group reside in the UK.

					6 months ended		5 months ended		11 months ended
				30 September 2019		30 September 2018		31 March 2019
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Revenues
Retainers					3,172		2,601		5,922
Fundraising and advisory transactions					4,268		4,698		11,950
Corporate advisory and broking					7,440		7,299		17,872
Sell Side M&A advisory					4,975		-		3,229
Institutional Stockbroking					1,767		1,816		3,415
Total Revenue					14,182		9,115		24,516
Services transferred at a point in time					10,154		5,610		16,891
Services transferred over a period of time					4,028		3,505		7,625
Total Revenue					14,182		9,115		24,516

3.    Expenses by Nature

					6 months ended		5 months ended		11 months ended
				30 September 2019		30 September 2018		31 March 2019
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Employee benefit expense					8,859		5,437		12,829
Non-employee costs					3,998		2,335		7,435
Total administrative expenses					12,857		7,772		20,264
Total number of employees					137		90		106

 

4.    Earnings per share

					6 months ended		5 months ended		11 months ended
				30 September 2019		30 September 2018		31 March 2019
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Earnings per share
Number of shares
Weighted average number of shares for the purposes
of basic earnings per share					158,976,251	118,351,283		125,845,121
Weighted average dilutive effect of conditional share
awards				14,040,237		9,749,612		14,927,048
Weighted average number of shares for the purposes
of diluted earnings per share				173,016,488		128,100,896		140,772,169
Profit per ordinary share (pence)
Basic profit per ordinary share					0.68		0.93		1.85
Diluted profit per ordinary share					0.63		0.86		1.65

The shares held by the Group's Employee Benefit Trust have been excluded from the calculation of earnings per share.

The earnings per share for the 11 months ended 31 March 2019 is reported after charging the non-recurring costs from the IPO and acquisition of Cavendish, which equate to 0.87p per share.

5.    Dividends

					6 months ended		5 months ended		11 months ended
				30 September 2019		30 September 2018		31 March 2019
					Unaudited		Unaudited		Audited
					£'000		£'000		£'000
Dividends proposed and paid during the year					557		1,181		1,635
Dividends per share					0.35p		1.05p		1.38p

6.    Balance Sheet items

i)             Plant, property and equipment

In accordance with IFRS 16, a right-of-use asset and lease liability of £1,034k has been recognised at the start of the period and a depreciation charge against profit based on the remaining term. At the reporting date the remaining balance was £690k.

ii)            Intangible assets

Intangible assets include goodwill of £13,335,000 recognised on the acquisition of all the share capital of Cavendish Corporate Finance (UK) Limited and all the partnership rights of Cavendish Corporate Finance LLP on the 5^th December 2018.

iii)          Deferred tax asset

Deferred taxation for the Group relates to timing differences 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.

iv)           Trade and other receivables

Trade and other receivables principally consist of amounts due from client, brokers and other counterparties.

v)            Borrowings

The overdraft balance at 30 September 2018 related to the funding of unsettled trades by Pershing through our Model A Settlement Agreement. As at 30 September 2019, there was no such balance.

vi)           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.

vii)         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 was 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.

 

END

 

 

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