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finnCap Group PLC (FCAP)

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Wednesday 18 November, 2020

finnCap Group PLC

Interim Results and Interim Dividend

RNS Number : 6452F
finnCap Group PLC
18 November 2020
 

18 November 2020

 

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

Interim results for the six months ended 30 September 2020 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 2020 ("H1 or H1 21").

Financial Highlights - revenue growth, cost control, balance sheet strengthened

· Revenue up 44% to £20.5m (H1 20: £14.2m)

 

· Pre-tax profit up 166% to £3.6m (H1 20: £1.4m)

 

· Adjusted pre-tax profit(1) up 189% to £4.3m (H1 20: £1.5m)
 

· Adjusted EPS(1) of 2.19p per share (H1 20: 0.76p)

 

· Interim dividend of 0.5p per share declared

 

· Substantially strengthened balance sheet; cash(2) of £12.1m (H1 20: £5.1m)

 

Operational Highlights - strong performance in COVID-19 impacted period, further revenue generating investment

· Completed 35 transactions across a broad range of sectors and products (H1 20: 29)

 

· Total deal and advisory fees up 53% to £14.2m (H1 20: £9.2m)

 

· ECM: completed 17 equity issues raising a total over £300m for listed clients, completed second IPO of FY21; and advised on 4 completed public takeovers with a total deal value of £212m

 

· M&A: Completed 5 private M&A mandates (H1 20: 8)

 

· Average monthly retainers £530k (H1 20: £529k), client base stable at 125

 

· Investment in sector coverage: Family Offices, Human Capital, Technology, UK M&A and Alternative Capital fundraising

 

· finnCap Analytics: new Equity Advisory team established within the Institutional Sales and Trading department, expected to start operating by mid-2021

 

Current Trading

· Q3 has started well with the completion of the IPO of Fonix Mobile plc raising £45m and the £87m placing and open offer for Synairgen plc; good pipeline in both ECM and M&A for remainder of H2

 

· Expectation of a good result for the year ending 31 March 2021, well ahead of the prior year, notwithstanding the uncertain operating environment

 

· Disposal of 70% of holding in PrimaryBid Limited for c.£700k. Completion expected in early 2021 subject, inter alia, to regulatory approval

 

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

"In an unprecedented period, our team has delivered a great result for our first half, with revenue up over 40%, and a record half year for finnCap.

COVID-19 related cost control action and higher revenues have boosted profit and substantially strengthened our balance sheet and this has given the Board the confidence to resume dividend payments today.

Our strategy of developing a full suite of products for growth companies - which, we believe, differentiates us from our peers - is delivering incremental revenue.  Having completed the integration of Cavendish, we are now moving into a key phase of our strategy - carefully seeking bolt on acquisitions in adjacent sectors which align with our culture and further our vision of building a more broadly-based group, focused on servicing growing companies' needs.

The uncertain operating environment means we must remain cautious, however, Q3 has started well, with the completion of the IPO of Fonix Mobile plc and a further large fund raising for Synairgen plc and our pipeline of deals remains good.

Today we separately announced that our Chairman, Jon Moulton, is stepping down from the Board on 31 December with Robert Lister appointed to the Board as our new Chairman on 1 January 2021. In addition, having completed oversight of the integration of Cavendish into the Group, Lord Leigh of Hurley has decided to step down from the Board today and return to a front-line relationship and revenue generation role.

Jon has been an integral part of finnCap's growth and development over the past eleven years in which we have established the finnCap brand and culture.  I would like to record my thanks for his friendship, support and challenge throughout this period.  I would also like to thank Howard for his valuable contribution to the Board during the integration and am delighted that he is remaining as Senior Partner of Cavendish."

Contacts

finnCap Group plc    Tel: +44 (0) 20 7220 0500

Sam Smith, Chief Executive Officer      [email protected]

Richard Snow, 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

 

Sapience Communications (PR Adviser)      Tel: +44 (0) 20 3195 3240

Richard Morgan Evans

 

Notes to Editors

finnCap Group plc (together with its subsidiaries the "Group") provides financial services to growth companies both public and private. It provides advisory, broking and research services to 125 companies on AIM and on the London Stock Exchange Main Market and also advises on M&A, with a specialism in sell-side M&A through Cavendish Corporate Finance, as well as corporate debt   and private company fundraisings.  finnCap also provides trading services to a broad range of institutional investors

Notes:

(1)  The calculation of underlying pre-tax profit and adjusted earnings per share is shown in note 9 of the Interim Financial Statements.

 

 

(2)  At 30 September 2020, amounts due to HMRC under COVID-19 arrangements were £0.8m and are repayable over the next 3-6 months and the amount due on the 5 year fit out loan which is repayable in equal instalments and matures in June 2025 was £1.7m. Cash at 30 September is stated after deducting market making working capital.

finnCap group PLC ("finnCap" or the "Company")

Interim results for the six months ended 30 September 2020 and interim dividend

In March 2020, in line with most UK corporates, we undertook rapid preparations for the anticipated adverse impact of COVID-19 related measures on the UK economy and the businesses of our clients by cutting costs and taking action to strengthen our balance sheet. These measures included implementing immediate and significant pay reductions for staff and all directors for the first three months of this financial year ("FY21"); the cessation of dividend payments and the cancellation of discretionary bonus payments for FY20. We also took action to reduce non-staff costs where this was possible, for example by reducing the Group's discretionary marketing spend.

Against our initial expectations, activity in our markets in H1 has been strong, with increased equity fundraisings to support our clients' financial needs and investment in strong business cases. We have also benefited from on-going long-term investment in building leading expertise in the healthcare, biotech and tech sectors where there has been significant corporate activity.  As a result, revenue generation in H1 has proven to be stronger than we expected and, with cost actions outlined above, we have therefore delivered materially higher profits and cashflow than in H1 last year.

This performance has strengthened the financial resilience of the Group with cash(2) at 30 September 2020 of £12.1m vs £4.7m at 31 March 2020.  It has also given us confidence to continue to invest in the business and to consider new growth opportunities.  We have made senior hires for the M&A business (including specialists in Human Capital, Technology, and UK M&A), Alternative Capital and a specialist to cover Family Offices.  In H2 we will be making additional, focused headcount investment in the ECM and equities business including the establishment of a new venture which will develop market analysis strategies for large institutions and hedge funds - a completely new business activity and customer segment for finnCap.  We have now hired the leadership team for this venture, which is expected to start trading in the middle of CY 2021, and is discussed, further, below.

The pandemic continues to disrupt the UK economy materially and, although recent developments around vaccines are encouraging, we remain cautious about prospects for our clients and our business in 2021.  However, our strategy of developing a full suite of products for growing companies, which differentiates us from our peers, is working well and, with a good pipeline for the remainder of the year, we look forward to a good performance for the year to 31 March 2021 with substantially higher profits than the prior year.

Further discussion of our results is set out below.

ECM

The equity capital markets division delivered £16.3m of revenue in the period (H1 20: £9.2m), with deal fees exceeding £10m for the first time, stable retainers and a strong contribution from trading.  The individual contributors to this performance are considered below.

Retainers - Total fees from retainers in the period were £3.2m (H1 20: £3.2m).  In an environment where winning new clients was challenging, we were pleased to have won 11 new retained clients. The natural loss of clients to M&A and delisting continued and the retained client base, therefore, remained stable.

Transactions - Total fees received from transactions in the period were £10.1m (H1 20: £4.3m).  In H1, we raised over £300m across 15 equity fundraisings for listed clients and 2 IPOs.  We also advised on a total of 4 completed takeovers and plc advisory roles with an aggregate deal value of £212m.

The debt advisory team, which works across both finnCap and Cavendish, completed 4 advisory mandates and billed £0.5m in H1.

Trading - Trading revenues were £3.1m (H1 20: £1.8m) with the team providing critical liquidity to our corporate and institutional clients during a very volatile trading period and benefitting from increased corporate activity across the equity capital markets

finnCap Analytics: We have now hired the senior members of a new team to lead an expansion of our equity sales and trading business into servicing a new group of institutional investors, through offering analysis of market trends and events to develop sales and trading ideas and execution predominantly in relation to large cap equities.  Our objective is to grow our secondary commission business and to bring more balance to sources of revenue within ECM, as well as establishing relationships with institutions that will be increasingly important to our growing corporate clients as they seek to access larger institutional investors.  This unit is expected to be fully operational from mid CY 21.

In order to incentivise this team and to attract further talent, an equity programme has been put in place whereby the Company will issue options - across the whole team - over up to 20 million new ordinary shares at a price of 20p per share.   Awards of the share options, which will be made in four equal tranches exercisable between April 2024 and April 2028, are conditional on achievement of annual, increasing unit PBT targets over the 4 financial years to 31 March 2025 and on continued employment.  In aggregate the team must deliver unit PBT of £8.5m in order to be awarded the incentive plan in full.  Although the equity programme is potentially large, it enables us to enter a completely new line of business that is highly complementary to our existing offering, at low financial risk and with appropriate and challenging hurdles.

M&A Advisory 

Cavendish generated revenues of £4.2m in H1, down on H1 20 (£5.0m) but significantly ahead of H2 20 (£2.4m).  In total, it closed 5 private M&A transactions. Whilst this level of revenue is below Cavendish's recent average run rates, we believe this is a performance comparative with Cavendish's peers.

Activity remains stable in Cavendish and the revenue pipeline for the remainder of the year is stronger than for H1 and currently includes one fee potentially material in the context of the Group.  In H2 we expect to start to benefit from business brought in by our new sector M&A specialists.

Administrative expenses

Costs in the period increased over the prior half-year primarily as the result of the substantially higher discretionary bonus accrual which reflected the Group's strong financial performance.  Despite this increase, staff costs as a percentage of revenue decreased to 59% from 62% in H1 last year.  

Non-employee costs per staff member have increased by £4k to £33k due to a significant introductory fee paid to a third-party in connection with an M&A transaction.  Excluding third party introductory fees in each period, non-employee cost declined by 5%.  Lower discretionary marketing, travel and entertainment spend has significantly exceeded increased IT and communication costs from home working and higher trading costs arising from increased trading revenue and volumes.  We now expect that our operating costs for FY21 (excluding bonuses, share based payments and third-party introductory fees) will be around 3-5% below those for FY20. 

Non-recurring items

In September, the Group occupied its new offices at One Bartholomew Close having completed a COVID-19 compliant fit out.  We have treated the lease and related costs of c.£848k (being interest and depreciation under IFRS 16) for the overlap period until occupation in August as a non-recurring item.  In addition, the Group incurred £70k of moving costs and c.£73k of COVID-19 related redundancy settlements.  Dilapidations and related costs arising from our surrender of leases for our previous offices were previously provided. 

Capital and liquidity

The Group's cash position improved substantially to £12.1m from £4.7m at 31 March 2020.  Cash is stated before deducting c.£0.8m deferred taxes due to HMRC under COVID-19 arrangements, which will be repaid by January 2021 under terms agreed with them and the balance of the £1.7m fit out loan which will be repaid over the next 5 years.  The capital expenditure on fit-out was c £1.9m and has been capitalised and will be substantially written off over the life of the 10 years lease.

In October, the Group accepted a cash offer for 70% of its holding in PrimaryBid Limited. On completion, which is expected during the early part of CY21, we will receive c.£700k in cash which will further bolster our cash resources.  The uplift from this sale and the increased value of our remaining stake are recorded within other income as a mark to market adjustment.

A stronger liquidity position and the longer-term financing of our office move means that the Group is well positioned to withstand a challenging economic environment and also positions us to make further strategic moves over time.  This may include expansion into new business areas servicing growing companies either organically or inorganically. 

Interim dividend

The Board recognises the importance of income to its shareholders and appreciated the support it received from shareholders for its cancellation of the final dividend for FY 20 which, in conjunction with the comparable contribution made by employees and directors has improved the balance sheet resilience of the Group.

In light of the financial performance for H1, the Directors have approved an interim dividend of 0.5p per share.  This will be paid on 18 December 2020 to shareholders on the register on 4 December 2020.  The associated ex-dividend date is 3 December 2020. 

Current trading and outlook

With the completion of the IPO of Fonix Mobile plc and an £87m placing and open offer for Synairgen plc, alongside a number of other smaller transactions, Q3 has started well and our pipeline of business looks promising for the forthcoming months.

Whilst we have experienced a sustained period of good trading so far in FY21, we must accept that the economic environment remains uncertain and is likely to be so for some considerable period ahead.  Notwithstanding this, with a strong performance in H1 and a good start to Q3 we expect to deliver a good result for FY2021 with profits well up on last year.  Our stronger balance sheet gives us the ability to continue to invest in our strategy of building a wider range of products and services and sector expertise, servicing the needs of growing companies in the UK.

 

Sam Smith, Chief Executive Officer

18 November 2020

 

 

 

 

Consolidated Statement of Comprehensive Income

Unaudited for the 6 months ended 30 September 2020

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

Notes

 

 

 

Revenue

 

 

 

2

20,492

14,182

26,006

Other operating income

 

3

716

25

(115)

Total income

 

 

 

21,208

14,207

25,891

Administrative expenses

 

4

(16,560)

(12,857)

(24,522)

Operating profit before non-recurring items

4,648

1,350

1,369

Non-recurring items

 

 

5

(991)

-

(188)

Operating profit

 

 

 

3,657

1,350

1,181

Finance income

 

 

 

9

13

26

Finance charge

 

 

 

(40)

-

(24)

Profit before taxation

 

 

 

3,626

1,363

1,183

Taxation

 

 

 

 

(702)

(276)

(411)

Profit attributable to equity shareholders

 

2,924

1,087

772

Total comprehensive income for the year

2,924

1,087

772

 

 

 

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

 

Basic

 

 

 

6

1.85

0.68

0.49

Diluted

 

 

 

6

1.74

0.63

0.46

 

 

 

Consolidated Statement of Financial Position

Unaudited for the 6 months ended 30 September 2020

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

Notes

£'000

£'000

£'000

Non-current assets

 

 

 

 

 

Property, plant and equipment

8 i)

15,219

1,126

635

Intangible assets

 

8 ii)

13,476

13,593

13,533

Financial assets held at fair value

 

1,344

476

393

Deferred tax asset

 

8 iii)

171

365

171

Total non-current assets

 

30,210

15,560

14,732

Current assets

 

 

 

 

 

Trade and other receivables

8 iv)

6,860

7,757

9,037

Current assets held at fair value

 

610

533

431

Cash and cash equivalents

 

12,137

5,056

4,695

Total current assets

 

 

19,607

13,346

14,163

Total assets

 

 

49,817

28,906

28,895

 

 

 

 

 

 

 

Non-Current liabilities

 

 

 

 

 

Lease liability

 

 

13,555

-

-

Borrowings

 

8 v)

1,307

-

-

Provisions

 

40

58

40

Total non-Current liabilities

 

14,902

58

40

Current liabilities

 

 

 

 

 

Trade and other payables

 

9,963

7,061

8,469

Corporation taxation

 

 

658

256

64

Borrowings

 

8 v)

394

-

-

Total current liabilities

 

 

11,015

7,317

8,533

Equity

 

 

 

 

 

 

Share capital

 

 

1,730

1,697

1,697

Share premium

 

 

893

616

616

Own shares held

 

8 vi)

(1,636)

(1,636)

(1,636)

Merger relief reserve

8 vii)

10,482

10,482

10,482

Share based payments reserve

 

732

371

388

Retained earnings

 

 

11,699

10,001

8,775

Total equity

 

 

23,900

21,531

20,322

Total equity and liabilities

 

49,817

28,906

28,895

 

 

 

 

Consolidated Statement of Cash Flows

Unaudited for the 6 months ended 30 September 2020

 

6 months ended

6 months ended

12 months ended

 

30 September 2020

30 September 2019

31 March 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

Profit before taxation

3,626

1,363

1,183

Adjustments for:

 

 

 

Depreciation

531

495

948

Non-recurring depreciation and finance charge

768

-

-

Amortisation of intangible assets

39

59

79

Finance income

(9)

(13)

(26)

Finance charge

40

-

-

Share based payments charge

344

79

110

Net fair value gains recognised in profit or loss

(716)

(38)

115

Payments received of non-cash assets

(207)

(224)

(275)

 

4,416

1,721

2,134

Changes in working capital:

 

 

 

Decrease/(increase) in trade and other receivables

2,177

784

(495)

(Decrease)/increase in trade and other payables

1,495

(1,685)

173

Increase/(decrease) in provisions

-

(5)

(23)

Cash generated from operations

8,088

815

1,789

Net cash payments for current asset investments

 

 

 

held at fair value through profit or loss

(179)

578

680

Tax paid

(108)

(518)

(845)

Net cash inflow from operating activities

7,801

875

1,624

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

(1,911)

(99)

(262)

Purchase of intangible assets

-

(9)

(9)

Proceeds on sale of investments

-

477

508

Interest received

9

13

26

Net cash (outflow)/inflow from investing activities

(1,902)

382

263

Cash flows from financing activities

 

 

 

Equity dividends paid

-

(557)

(1,218)

Proceeds from exercise of options

310

50

50

Lease liabilities payments

(468)

(353)

(683)

Proceeds from borrowings

1,701

-

-

Net cash outflow from financing activities

1,543

(860)

(1,851)

Net increase/(decrease) in cash and cash equivalents

7,442

397

36

Cash and cash equivalents at beginning of period

4,695

4,659

4,659

Cash and cash equivalents at end of period

12,137

5,056

4,695

 

 

 

 

 

Consolidated Statement of Changes in Equity

Unaudited for the 6 months ended 30 September 2020

 

 

 

Own

Merger

Share Based

 

 

 

Share

Share

Shares

Relief

Payment

Retained

Total

 

Capital

Premium

Held

Reserve

Reserve

Earnings

Equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

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

Total comprehensive income for the period

-

-

-

-

-

(315)

(315)

Transactions with owners:

 

 

 

 

 

 

 

Share based payments charge

-

-

-

-

31

-

31

Implementation of IFRS16 (note 24)

-

-

-

-

-

(70)

(70)

Deferred tax on share-based payments

-

-

-

-

-

(194)

(194)

Dividends

-

-

-

-

-

(661)

(661)

Share options exercised

-

-

-

-

(14)

14

-

 

-

-

-

-

17

(911)

(894)

Balance at 31 March 2020

1,697

616

(1,636)

10,482

388

8,775

20,322

Total comprehensive income for the period

-

-

-

-

-

2,924

2,924

Transactions with owners:

 

 

 

 

 

 

 

Share based payments charge

-

-

-

-

344

-

344

Deferred tax on share-based payments

-

-

-

-

-

-

-

Dividends

-

-

-

-

-

-

-

Share options exercised

33

277

-

-

-

-

310

 

33

277

-

-

344

-

654

Balance at 30 September 2020

1,730

893

(1,636)

10,482

732

11,699

23,900

 

 

 

 

 

 

Notes to the Financial Statements

Unaudited for the 6 months ended 30 September 2020

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 1 Bartholomew Close, London EC1A 7BL, United Kingdom. The registered company number is 11540126. The Company is listed on the AIM Market 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 2020 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 2020.

 

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, 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 ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

Revenues

 

 

 

 

 

 

 

Retainers

 

 

 

 

3,179

3,172

6,471

Transactions

 

 

 

10,079

4,268

8,642

Corporate advisory and broking

 

 

13,258

7,440

15,113

Institutional Stockbroking

 

 

3,073

1,767

3,567

Total ECM

 

 

 

 

16,331

9,207

18,680

Sell Side M&A advisory

 

 

4,161

4,975

7,326

Total Revenue

 

 

 

20,492

14,182

26,006

 

 

 

 

 

 

 

 

Services transferred at a point in time

 

14,932

10,154

18,777

Services transferred over a period of time

5,560

4,028

7,229

Total Revenue

 

 

 

20,492

14,182

26,006

 

 

3.  Other operating income

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

Other operating income

 

 

716

25

(115)

 

At the reporting date, the Group's holding in PrimaryBid Limited was revalued by £0.7m to reflect the increase in fair value as the result of our agreement to sell of 70% of this investment. This is a private company investment included in level 3 of the fair value hierarchy as disclosed in the year end accounts.   

 

4.  Expenses by Nature

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Employee benefit expense

 

 

12,042

8,859

16,095

Non-employee costs

 

 

 

4,518

3,998

8,427

Total administrative expenses

 

 

16,560

12,857

24,522

 

 

 

 

 

 

 

 

Total number of employees

 

 

135

137

140

 

Employee benefit expense includes share-based payments which increased to £344k (H1 20: £79k). This reflected incentivisation options granted to employees in the period including those granted in relation to the salary reductions applied in Q1 21.

 

5.  Non-recurring items

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

Non-recurring items

 

 

 

991

-

188

 

Non-recurring items in the period relate to overlap (£848k) and moving costs (£70k) in connection with the relocation of the Group to 1 Bartholomew Close as well as £73k of group restructuring costs.

6.  Earnings per share

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

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

 

 

158,227,046

156,745,094

157,093,604

Weighted average dilutive effect of conditional share

 

 

awards

 

 

9,994,919

14,040,237

9,553,641

Weighted average number of shares for the purposes

 

 

of diluted earnings per share

 

168,221,965

170,785,331

166,647,245

 

 

 

 

 

 

 

 

Profit per ordinary share (pence)

 

 

 

 

 

Basic profit per ordinary share

 

 

1.85

0.68

0.49

Diluted profit per ordinary share

 

 

1.74

0.63

0.46

 

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

 

7.  Dividends

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Dividends proposed and paid during the year

-

557

1,218

Dividends per share

-p

0.35p

0.78p

 

 

8.  Balance Sheet Items

 

i)  Plant, property and equipment.

On 2 April, the Group took possession of its new lease at 1 Bartholomew Close. The right of use asset created by this lease is recognised in this reporting period. Due to the rent-free period, it is shown as non-current in the balance sheet. As at March 2020, the Group had a lease liability of £0.4m included in current liabilities relating to the leases on its previous properties.

 

ii)  Intangible assets

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

 

iii)  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.

 

iv)  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).

 

v)  Borrowings

The balance as at 30 September 2020 relates to a loan taken out to fund the fit out of the Group's new premises.

 

vi)  Own shares held

The value of own shares held is the cost of shares purchased the Group's Employee Benefit Trust. The Trust has the authority to acquire shares in finnCap Group plc and is funded by the Group

 

 

 

vii)  Merger relief reserve

The merger relief reserve, which is not distributable, 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 relief 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

 

9.  Alternative performance measures

The Non-GAAP alternative performance measures used in this statement are described below.

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, the gain from the sale and related revaluation of the group's stake in PrimaryBid Limited and includes a notional 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.

Measure: Adjusted profit before tax is calculated on a comparable basis with Adjusted EPS

Use: Both measures provide a consistent measure of the earnings performance of the core business activities.

 

 

 

 

 

6 months ended

6 months ended

12 months ended

 

 

 

 

 

30 September 2020

30 September 2019

31 March 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Profit attributable to equity shareholders

2,924

1,087

772

Fair value gains on long term investments

(716)

-

-

Non-recurring items

 

 

 

991

-

188

Share based payments

 

 

 

344

79

110

Amortisation

 

 

 

39

39

79

Taxation

 

 

 

 

702

276

411

Underlying pre-tax profit

 

 

4,284

1,481

1,560

Notional tax

 

 

 

(814)

(281)

(296)

Adjusted earnings

 

 

 

3,470

1,200

1,264

Basic shares

 

 

 

158,227,046

156,745,094

157,093,604

Basic EPS

 

 

 

 

1.85

0.68

0.49

Adjusted EPS

 

 

 

2.19

0.76

0.80

 

 

 

 

 

 

10.  Post Balance Sheet Events

On 26 October 2020 the Group agreed to sell 70% of its stake in PrimaryBid Limited for c.£700k in cash.  Completion is expected to complete in early 2021 subject, inter alia, to regulatory approval.

On 17 November 2020, the equity incentive plan for the finnCap Analytics team was established whereby the Company will issue up to 20 million new ordinary shares at a price of 20p per share subject to achievement of certain unit profit hurdles and continued employment.  These shares will be issued in four equal tranches between April 2024 and April 2028 and are conditional on achievement of annual, increasing unit PBT targets over the 4 financial years to 31 March 2025.  In aggregate the team must deliver unit PBT of £8.5m in order to be awarded the incentive plan in full.

END

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