finnCap has reported interim numbers to the end of September 2019 in line with October’s trading update – albeit that PBT of £1.4 million is a touch ahead of the number mooted in that announcement. A change in year end and the acquisition of Cavendish in December 2018 render comparison with the prior year somewhat redundant. However, as we noted in October, given the headwinds in certain markets - notably Equity Capital Markets (ECM) - this is a resilient performance, in our view. It serves to exemplify the growing proportion of revenues which finnCap now earns from outside ECM. Management has taken a pragmatic view on the prospects for the rest of the current financial year in citing the influences of external factors while emphasising the benefits of the Group’s diversified set of businesses. On that point, we note the early success in securing synergistic mandate wins as the enlarged group explores cross selling opportunities.
Group revenue for the first six months of finnCap’s current financial year was £14.2 million of which the ECM division contributed £9.2m and the M&A division £5.0m. Group pre-tax profit was £1.4m, with Adjusted EPS of 0.76p per share. An interim dividend of 0.42p per share has been declared. finnCap finished the half year with cash of £5.1 million.
During the period the Group completed 29 transactions, won 12 new retained corporate clients and achieved average monthly retainer fees of £529k. It also completed 8 sale mandates across 5 sectors, signed up 19 new sell-side mandates and executed, or is currently mandated on, 8 plc bid or advisory mandates for clients outside its retained client base.
The comment on current trading and the outlook for the business reflects current headwinds but also the resilience of the broad set of businesses that make up the Group. There is an encouraging pipeline of opportunities although the Board does caution that the result of the general election and market conditions for equity fundraisings remain crucial influences.
So far in the second half of its current financial year, the Group has closed further transactions and won business which has included the sale of Blayhall Professional to IRIS Software Group, the sign-up of 6 new retained corporate clients and the completion of several fundraisings.
finnCap has continued to explore revenue synergies from the enlarged group and the first half performance confirms that the Group has had some pleasing successes with the expanded debt team winning mandates, the appointment on two sale mandates on behalf of public companies that are retained clients of the ECM division and the introduction of several opportunities from Oaklins.