finnCap Annual Profit Down But New Year Begins Well On Strong Activity

(Alliance News) - Stockbroker finnCap Group PLC said Tuesday its profit fell substantially in ...

Alliance News 7 July, 2020 | 1:19PM
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(Alliance News) - Stockbroker finnCap Group PLC said Tuesday its profit fell substantially in financial 2020, but revenue growth in the first-quarter of the new financial year has surged 51% on strong capital raising activity.

For the 12 months to the end of March, finnCap's pretax profit, excluding non-recurring items, was GBP1.4 million, down 67% from GBP4.3 million the year before. Including such items, profit dropped by 63% to GBP1.2 million from GBP3.2 million.

This was due to a rise in administrative expenses to GBP24.5 million from GBP20.3 million.

Meanwhile, revenue grew by 6.1% to GBP26.0 million from GBP24.5 million, as growth in its M&A Advisory division more than offset a decline in Equity Capital Markets.

The M&A Advisory unit's revenue more than doubled to GBP7.3 million, driven by the acquisition of advisor Cavendish Corporate Finance LLP.

However, the Equity Capital Markets revenue was down 12% at GBP18.7 million from GBP21.3 million, due to a fall in deal fees as a result of lower equity issues by corporate clients, consistent with the market activity as a whole.

In response to the uncertainty surrounding the Covid-19 pandemic, finnCap said it will not pay any further dividends aside from the 0.42 pence per share interim payout.

Looking ahead, for the first quarter to the end of June, the group reported revenue of GBP9.8 million, up 51% from GBP6.5 million, as its ECM division benefits from several clients raising funds for Covid-19-related activities, while M&A continues to grow on completed transactions.

"The financial year was dominated by the uncertain political and economic backdrop which is reflected in our results. Equity issuance levels reached a multi-year low and M&A deal cycles lengthened considerably during the latter half of the year. Nonetheless we have continued to concentrate on expanding services, such as debt advisory and private growth capital, to enhance our product line up, as well as investing in sector coverage from which we expect to derive the benefit in future years," said Chief Executive Officer Sam Smith.

"The overall outlook for the global economy and the effects of Covid-19 remain uncertain and we must continue to be cautious about the overall prospects for the current financial year. In the shorter term, our pipeline of deals for the first half remains good and we will continue to deliver on our strategy for growth," Smith added.

Shares in finnCap were up 8.1% at 22.70 pence on Tuesday in London.

By Dayo Laniyan; dayolaniyan@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
FinnCap Group PLC Ordinary Shares 23.00 GBX 0.00 -

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