finnCap Group plc – Unaudited results

finnCap Group plc – Unaudited results

finnCap Group plc (AIM: FCAP.L) today announces the unaudited results for finnCap Ltd for the six months ended 31st October 2018.  finnCap Group plc is the holding company that acquired finnCap Ltd for shares on 22ndNovember 2018 (after the end of the Interim Period), and is reporting the results of finnCap Ltd for the Interim Period as this was the operating entity that is deemed to have been commonly controlled throughout the period.  Subsequent to the period end, the Company acquired Cavendish Corporate Finance LLP and Cavendish Corporate Finance (UK) Ltd (together “Cavendish”), a leading mid-market sell-side M&A advisor, and was admitted to trading on AIM on 5th December 2018.  As the acquisition of Cavendish occurred after the end of the Interim Period, the financial statements do not include the results of Cavendish, which results are expected to constitute a material component of the Group’s performance in the second half of the year and thereafter.  Further details on Cavendish’s performance are given below in the Chief Executive’s Statement.

Financial highlights:

  • Revenue: £11.7m (2017: £13.1m) in line with management’s expectations
  • Profit before tax: £2.1m (2017: £2.7m)
  • Dividend: £1.18m paid in June 2018 (2017: £800k) and a further £225k paid as an interim after the period end (2017: £255k); the intention is to declare a small dividend in January 2019, subject to the necessary court approval for a capital reorganisation

Commenting, CEO Sam Smith said:

“This has been an incredibly exciting time for finnCap – we performed strongly in the period, acquired Cavendish to enable us to offer a broader range of services to a larger number of companies both public and private, and joined our 125 public market clients by listing on AIM.  We are now exceptionally well positioned to advise ambitious growth companies on all of the major forms of financing, including debt, venture capital, IPOs, subsequent public offerings, as well as offering sell-side M&A, exit planning, bid defence and PLC regulatory advice.  There are very few other firms that can offer such a wide range of services to our target client base, and we are very excited about the potential for our business.”

Chief Executive’s Statement

In the Interim Period, finnCap generated a pre-tax profit of £2.1m, from revenues of £11.7m. This is in line with management’s expectations, and compares to our performance for the year to 30th April 2018 of pre-tax profit of £3.1m, from revenues of £22.1m, which was itself finnCap’s most profitable year to date. The reduction in revenue compared to the same period in the prior year related to the timing of one large corporate fee and a reduction in secondary commission. The reduction in secondary commission was expected and finnCap had accordingly reduced its cost base.  Retainers, trading commissions and deal fees have all been in line with the Directors’ expectations.

This strong performance was the result of our continued focus on providing our clients with the advice to promote their investment case to the right audience, combined with the ability to access capital from a wide range of institutions and investors. We have also continued to ensure that we are capable of strong trade execution on behalf of our institutional clients.

In December 2018, finnCap acquired Cavendish Corporate Finance, a leading sell-side M&A advisor to mid-market companies, and the enlarged group was admitted to trading on AIM on 5th December 2018.  The directors see material opportunities for both sides of the business from their combination.

The acquisition materially expands the services that both finnCap and Cavendish can provide to their respective clients, and enables the combined group to advise on a wider range of financing options for both public and private companies.  As the acquisition was after the end of the Interim Period, there is no recognition in these results of Cavendish’s performance. Cavendish performed strongly in the first half of its financial year, and its unaudited management accounts show turnover was £9.4m for the 6 months to 30th September 2018.  This performance almost matched its revenues for the full year performance to 31st March 2018 of £10.2m, on which it generated pre-tax profits of £1.84m.

The Board remains optimistic about the Group’s prospects despite the current uncertain economic and political climate.  As stated in the Admission Document, the Board’s current intention is to declare a small dividend in January 2019, subject to the necessary court approval for a capital reorganisation.  Additionally, the Board intends to declare a further dividend alongside its final results which it expects to announce in June 2019.

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