finnCap Group PLC (LON:FCAP) said it recorded its strongest ever first quarter with revenues 50% higher than the same period last year, boosted by capital raising activities, which has flourished during the coronavirus (COVID-19) lockdown.
The broker helped clients raise significant sums of cash to strengthen their balance sheets, particularly in the tech and life sciences sectors, with Avacta’s £48mln fundraiser among the highlights of this busy period.
The company, which has added M&A and debt advisory to its traditional investment banking services, told investors that market volatility had provided a fillip too by helping drive up trading income.
Turnover for the three months ended June 30, 2020, was £9.8mln, up from £6.5mln, while advisory fees were also £6.5mln.
In common with many businesses at the start of the crisis, finnCap cut costs, including the dividend, enhancing its cash position, which stood at £8.5mln at the end of the first quarter.
“This strong performance in Q1 coupled with our actions to significantly reduce costs has resulted in us having a much more resilient balance sheet,” finnCap chief executive Sam Smith said in the update.
If the initial 90 days of the new financial year were surprisingly strong, the 12 months to March 30, 2020, were a complete contrast with the UK general election and Brexit uncertainty subduing the firm’s financial performance.
Turnover nudged £1.5mln higher to £26mln, bolstered by the strong performance of the M&A division, while pre-tax profits fell to £1.4mln from £4.3mln previously.
finnCap said it is keen to reinstate the dividend but will only do so when the “operating environment is more certain and the visibility of revenue becomes clearer”.
"The financial year was dominated by the uncertain political and economic backdrop which is reflected in our results,” said CEO Smith.
“Equity issuance levels reached a multi-year low and M&A deal cycles lengthened considerably during the latter half of the year. Nonetheless, we have continued to concentrate on expanding services, such as debt advisory and private growth capital, to enhance our product line up, as well as investing in sector coverage from which we expect to derive the benefit in future years,” she added.
Significant progress was made operationally during the year as finnCap completed 61 transactions; 13 private M&A deals; and three debt mandates (with nine signed up for 2021).
Looking ahead, Smith said the outlook for the global economy, riven by the effects of the coronavirus pandemic, was “uncertain” and that “caution” was the watchword for the remainder of the financial year.
However, she said in the shorter term the group’s pipeline of deals for the first half “remains good and we will continue to deliver on our strategy for growth".