1st Apr 2020 11:07
(Alliance News) - finnCap Group PLC said Wednesday its trading since the end of February has been in line with the company's internal "cautious" expectations.
The stockbroker, however, said it will not be paying a second dividend for the year ended March 31 in order to save cash.
finnCap expects its second half - the six months to March 31 - will be "broadly breakeven", with its equity capital markets division performing in line with the first half and the M&A division behind.
Turnover for the 12 months to March 31 is expected to be about GBP25.8 million versus GBP24.5 million in the 11 months to March 31, 2019.
finnCap started trading on London's AIM market in December 2018, raising GBP3.8 million for itself in the process.
"An indication of how rapidly the world has changed is that on 27 February we only noted the spread of Covid19 and yet five weeks later the government has implemented extreme social and economic measures in response to Covid19 and the UK is now in a 'lockdown'," the stockbroker said.
As a result, finnCap expects these measures to have a "material negative impact" on its financial 2020 performance.
finnCap continued: "However, the nature and the timescale of such impact is currently very uncertain. For the time being we still have a strong pipeline of M&A deals for the first quarter of financial 2021, albeit we expect to see a number of deals pulled or delayed, and the equity capital markets division continues to complete transactions."
In order to combat the uncertainty, finnCap has reviewed its operating expenses and taken "swift action" to lower costs.
This includes salary and fee cuts for all members of staff. The board is taking a 100% fee cut for the next three months while executive directors are taking between a 44% and 92.5% salary cut. finnCap has also furloughed some of its staff, on top of wider temporary pay cuts.
All of this is expected to reduce its cash monthly operating expenses by 31% compared to February 2020.
The stockbroker said it will recompense staff taking pay cuts over the next three months by granting options over about 5.3 million shares, exercisable at 1 pence each. The shares will be granted on the basis of 10 options for every pound of salary forgone.
finnCap noted no directors will receive options.
Looking ahead, finnCap said the trading environment has "never been more uncertain". The stockbroker, however, believes it is well placed to "weather the storm".
"The board is planning for a very difficult trading period ahead, particularly in the group's M&A division. In light of this it is pleasing that the group's equity capital markets division has continued to advice on deals throughout the last few weeks including equity fundraises for Synairgen PLC, PCI-Pal PLC and Trackwise Designs PLC, and some of the fees associated with these will be recognised in financial 2021," finnCap added.
Shares in finnCap were untraded in London on Wednesday but last closed at 17.00 pence each.
By Paul McGowan; [email protected]
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