FinLab’s results combine relatively stable income from management fees and dividends received from the asset management subsidiaries, Heliad and Patriarch (total income at €1.76m vs €1.88m in H116), and sizeable revaluation gains (Kapilendo, Heliad) of €2.52m (vs -€0.3m in H116). The recent share issue and improved operating cash flow increased the company’s net cash position to €4.28m from €0.97m at end-2016. This puts FinLab in a strong position to execute further fintech investments. Following the recent positive share price performance, FinLab’s shares trade at an 18.9% premium to last reported NAV.
FinLab reported a pre-tax profit of €3.03m in H117, significantly above the H116 figure (€0.50m). This was largely due to positive revaluations on the company’s portfolio holdings (€2.52m compared to write-downs of €0.3m in H116), in particular Kapilendo and Heliad Equity Partners. A 33.8% y-o-y increase in income from investments to €0.67m and higher income from the sale of securities and financial assets (up 46.2% y-o-y to €0.73m in H117) also boosted profits. Diluted EPS came in at €0.63 vs €0.09 despite the higher average share count.
In May 2017, the company raised €5.85m issuing 450,000 new shares at a price of €13.00 per share. The proceeds will be used to make further investments in earlystage companies, as FinLab targets a portfolio of seven to 10 fintech investments. In addition to the four investments held at end-2016 (nextmarkets, Deposit Solutions, Kapilendo and Authada), the company recently entered into two, sevenfigure euro investments in FastBill, a leading German SaaS tool for small business financial management, and Vaultoro, a real-time bitcoin gold exchange.
FinLab’s NAV at end-June amounted to €16.13, an increase of 7.2% from endMarch (€15.04) and a 9.1% rise compared to end-2016 (€14.79).The current share price stands at €19.18, implying an 18.9% premium to the last reported NAV. This may reflect market expectation of continued investments in NAV and earningsaccretive acquisitions. If we assume that the major portfolio holding, Heliad Equity Partners, trades in line with NAV (vs a discount of 26.0% at end-June), the premium is reduced to c 5%.