3rd Jul 2014 11:31
LONDON (Alliance News) - City of London Group PLC Thursday said that losses widened in its last financial year, hit by a lack of capital to invest in its platforms' growth, with the situation unaided by a failed GBP17.4 million fundraising towards the end of 2013.
The financial services company had warned in February that it expected its second-half losses to exceed the GBP2.0 million lost in the first-half. Its financing plan fell through after the funds from new investors failed to turn up in an escrow account.
In a statement, City of London Group said that it made a GBP5.2 million loss in the year ended March 31, compared with the GBP1.8 million loss reported for the prior year. Revenue from continuing operations increased to GBP2.8 million, from GBP2.2 million, and revenue from discontinued operations rose to GBP2.9 million, from GBP2.7 million. However, administrative expenses relating to continuing operations rose to GBP5.2 million, from GBP3.6 million, and to GBP2.4 million, from GBP1.2 million, from discontinued operations.
The group's troubles have prompted it to focus on funding small and medium sized enterprises. It refinanced its trade finance platform with Macquarie Bank Ltd in March, in a deal that reduced its fully diluted stake in the business to 43%. The group said that the platform remains a key investment despite the fact that it is no longer consolidated in its accounts.
Meanwhile, City of London Group Thursday said that its SME asset backed finance provider, Credit Asset Management Ltd, has received commitments for GBP10.0 million of equity, 90% of which is in preference shares, and is seeking GBP30.0 million of debt in order to build a GBP40.0 million book of leases to SMEs and loans to businesses.
It is also looking to sell off its litigation funding business, Therium Capital Management Ltd in order to simplify the group and fulfill its strategy of focusing on SME lending. It is looking to cut costs, and its executive team has agreed to a 60% cut in salaries and working days, said the company. The group expects its cost-cutting measures to reduce its central overhead to a run rate of about GBP500,000, from GBP2.7 million in 2013/14, by the end of 2014.
City of London Group shares were Thursday quoted at 17.15 pence, down 4.7%.
By Samuel Agini; [email protected]; @samuelagini
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