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07 Jul 2020 | 10:58

FinnCap posts record quarter as clients raise cash

(Sharecast News) - FinnCap reported its best ever quarter in the three months to the end of June as it advised on fundraising for companies investing in Covid-19-related projects and strengthening their balance sheets. The broker and financial adviser to growth companies said turnover rose 51% in the first quarter to £9.8m. As a result, cash increased to £8.5m at the end of June from £4.7m at the end of March.

Sam Smith, chief executive, said: "In Q1 2021, we helped clients raise significant equity to strengthen balance sheets and support investment cases from a range of companies, many of which operate in areas such as life sciences and tech and are at the forefront of the UK's efforts to recover from the pandemic. This contributed to making the period the best quarter we have ever recorded."

FinnCap shares rose 8.1% to 22.70p at 10:44 BST. Shares of the company, which floated in December 2018, fell to a record low of 15.5p in May.

The first quarter improved on results in the year to the end of March when pretax profit fell to £1.4m from £4.3m as revenue per employee dropped to £189,000 from £230,000. Administrative costs jumped 21% to £24.5m. FinCapp said the poor performance was caused by political uncertainty during the Brexit logjam that suppressed dealmaking by clients.

"In this context, whilst the result for the year was disappointing ... it was important to remain profitable and continue the development of the business," Smith said.

FinnCap scrapped its final dividend and cut costs, including employees' and directors' pay as the Covid-19 crisis emerged in March. The company said it expected operating costs to fall by about 10% this year. The board will review the dividend with first-half results in November but FinnCap said it would need more clarity on business prospects to reinstate the payout.

"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," Smith said. "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."





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