Audited results for the year ended 31 March 2023
26/06/2023 07:00
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RNS Number : 8074D VSA Capital Group PLC 26 June 2023
DATE: 26 June 2023
VSA Capital Group plc
("VSA", the "Company" or together with its subsidiaries the "Group")
Audited results for the year ended 31 March 2023
VSA Capital Group plc (Aquis: VSA), the international investment banking and
broking firm is pleased to announce its audited results for the year ended 31
March 2023.
Highlights
· Turnover of £4.36m (previous year £3.61m), underlying profit of
£0.61m (previous year £0.40m)
· Cash at year end £1.27m (previous year £2.01m)
· NAV £4.372m (previous year £4.162m)
· Retained Corporate Clients of VSA Capital Limited 24 (2022: 24)
Another busy year of progress despite difficult market conditions.
We have continued to build on our core sectors of Natural Resources and
Transitional Energy and made solid progress into the Leisure and Consumer
Brands sectors and into Technology and Software, eMobility and eCommerce.
Andrew Monk, CEO of VSA Capital Group plc said:
"This is a solid result in difficult markets. We continue to advise and
raise funds for companies listed on AIM and the Main Market of the London
Stock Exchange and have established a strong position as an adviser and broker
to companies on the Aquis Stock Exchange. Our expanding activities into
M&A and strategic advisory work positions us well for the future. We are
cautiously optimistic about the prospects for VSA Capital in the current
year."
For more information, please contact:
VSA Capital Group plc +44(0)20 3005 5000
Andrew Monk, CEO
Andrew Raca, Head of Corporate Finance
Marcia Manarin, Finance Director
Alfred Henry - AQSE Corporate Adviser +44 (0)20 3772 0021
Nick Michaels www.alfredhenry.com (http://www.alfredhenry.com)
Maya K. Wassink
Chairman's Statement
I am pleased to present the audited Annual Report and Accounts for VSA Capital
Group plc, which is the holding company of the regulated investment banking
and broking firm, VSA Capital Limited.
As last year, the results include another tranche of amortisation of £330,770
resulting from a simple restructuring that we undertook on 31 March 2021 and
this is expected to repeat for another three years. Once the intangible assets
are fully amortised, which we currently anticipate will be in March 2026, our
profits will no longer be affected by the amortisation charge on this asset.
In his report our CEO Andrew Monk describes certain very challenging aspects
of the market, of which we should all take note. Nevertheless, and especially
in such difficult circumstances, the board is pleased with the outcome for the
year which reflects further growth and progress for the Group.
Whilst our optimism for the current year remains cautious, reflecting
challenging conditions, we are confident as a board that the Group's strategy
is robust to continue to build shareholder value.
I pay tribute to my fellow Directors and staff within the Group and also to
our clients who trust us as their advisers, as they themselves work to build
value for their shareholders in such difficult global conditions.
Mark Steeves
Chairman
CEO'S Report
Principal Activity
The principal activities of the Group are the provision of corporate finance
advisory, stockbroking, fundraising and research services to both private and
public companies.
Review of the Business
On 31 March 2021, in preparation for the IPO of the Company on the Aquis
Growth Market, VSA Capital Group plc acquired VSA Capital Limited in a reverse
takeover and its results are therefore consolidated into these Group accounts
for the second time in the financial statements for the year ended 31 March
2023.
Review of the Year
I am pleased to report a good underlying performance for our year ended 31
March 2023 as the last 12 months have been exceptionally difficult for all
players in the equity markets. We achieved a turnover of £4.36m (2022:
£3.61m) and an underlying profit of £0.61m (2022: £0.40m).
As explained previously, we regard our underlying profit (profit before tax
adding back amortisation) as most pertinent as it is considered by many as a
better reflection of how much money is being generated. As the amortisation
of intangible assets is a non-cash item, we exclude this when calculating our
underlying profit. Cash has decreased this year to £1.273m (March 2022:
£2.010m) as the substantial fee for the 'Silverwood Transaction' has been
received in equity. We will look to monetise that position at the
appropriate time. Because it is a listed company, we have to reflect it by
marking to market, regardless of how we think it may perform. Like many of our
peer group, we own equity positions in many of our clients, and in this past
turbulent year they gave a substantial negative return, which we have to
reflect in our Group Statement of Comprehensive Income. However, we hope will
regain ground in the current year. Even so our NAV increased by 5% to
£4.372m (from £4.162m in March 2022), even after the material amortisation
charge.
Our retained clients remained static at 24, although the outlook for the
sectors we are involved in looks very promising. Whilst we would have liked to
have won a few more clients and will look to do so going forward, I am happy
that we have good quality clients which is more important than just the
overall number.
Sector Focus
We remain focussed on our core sector expertise of Natural Resources,
Transitional Energy, Technology and Consumer/Leisure as we believe these are
good sectors for long term growth, although in 2022/23 they proved very
challenging. We seek to add value to our corporate clients and provide them
with innovative solutions to their corporate, strategic and financing needs.
Mining as a sector has seen a lack of investment now for about 15 to 20
years. Production across the industry is slowing as demand picks up and so
this will result in many commodities facing a 'squeeze' at some stage in the
future. Pretty much all experts agree on this, but stock markets are not
responding - although inevitably, they must. We are big supporters of
Cornish mining but the development of the Southwest region has been slowed by
the issues surrounding Tungsten West's Hemerdon mine getting back into
production. The Ukraine war and rising costs had a huge impact but as the war
continues, the demand for Tungsten (a key part of military ammunition) will
increase, and there is a very limited supply outside of China. We have seen
good progress made in our Transitional Energy activities, with a particular
emphasis on energy storage, and electric mobility. In Technology and Software,
we have recruited new members of the team to strengthen our offering and
indications are that this will prove to be an important area of growth for
us. In Consumer Brands we completed the acquisition of approximately 20% of
Lush Cosmetics for Silverwood Brands plc for approximately £216m. This was a
complex transaction, and also novel in that it was not technically an RTO
under the Aquis Growth Market Rules. As far as we and Silverwood are
concerned, the transaction is completed, although we note that as there is an
acrimonious relationship between Lush and Silverwood which we hope will abate
with the passage of time. There may be speculation as to any further activity.
We have recruited an additional research analyst to help our coverage of the
Consumer/Brands sector in general.
Transitional Energy as an industry is becoming very strong. The stock market,
however, has become impatient with the pace of change. This trend is very
similar to the Technology sector back in 2000, when we had the Dot Com crash,
but at that time the good companies made good progress, and some became hugely
successful. We expect to see a similar pattern developing in Transitional
Energy.
Equity Capital Markets
Pension funds have been reducing their exposure to equities now for 20 years
but in the last 12 months the 'de-equitisation' of the UK has become extreme
and now exposure to equities by pension funds has fallen from about 40% to
probably less than 4%. This is untenable for our industry and also untenable
for the UK Economy as it deprives UK companies of capital to grow. We are
approaching the stage where either the UK gives up on quoted equities or there
is a change of stance by the Government to make equities more attractive and
the accounting less penal for pension funds. If the latter does occur, then
one can be very optimistic, but it certainly cannot be taken for granted and
this is why at VSA we continue to tread carefully and keep a tight cost
base.
The Aquis Stock Exchange is an important part of our growth strategy as we
believe it will be an important and successful challenger stock exchange in
the UK. It was not an easy year for Aquis, as many retail platforms are still
very slow at offering an electronic service to their customers, but we believe
that as demand continues to grow, that they will realise that if they do put
in electronic dealing their customers will leave them. We dual listed two
companies on the Aquis Growth Market; Guanajuato Silver (from Canada) and
Cooks Coffee (from New Zealand). The support for Aquis stocks was further
clearly seen by our incredibly successful Aquis Showcase day and the running
of the "Britain's Got Aquis" competition. We will be hosting this again this
year at the end of November and expect it to be bigger, better and even more
exciting.
We continue to support our corporate clients on AIM and the Main Market of the
London Stock Exchange in terms of financial advice, the provision of equity
research and fundraisings. We look forward with great interest as to what
opportunities will arise as the review of the Main Market takes shape.
International Reach
We have always had a very international approach at VSA, although as we
reported last year, we have been unable to really do much with our Shanghai
office. Our strategy has always been to support western companies develop
their China strategy, whilst also advising on transactions involving Chinese
investment or expertise. Despite the difficult geopolitical situation,
currently I am hopeful that this year we will be back in China and able to
complete transactions as one cannot ignore that it is the second largest
economy in the World, and vital to the mining industry. At the same time
though, we have been developing more links into the USA and continue to build
our relationships in Africa and other parts of the World. In Africa we are
working well with our partners in Kenya, Faida Investment Bank, and we have
very recently entered into a strategic alliance with Bravura Holdings in South
Africa. We have always been proud of the fact that we are not just reliant
on London as many of our competitors are. This has also proven useful as we
develop our M&A activities.
We are always looking for opportunities at VSA to create shareholder value,
which is not easy in an industry which has been in decline. The fact that we
have become stronger over the past 5 years, whilst our peer group has
weakened, suggests that if the industry does see a recovery, we will be well
placed to take advantage of it. We have historically tried many times to
become a Nominated Adviser on AIM, as without this ability it has been harder
to grow. Unfortunately, we were unsuccessful. The London Stock Exchange has
historically made it very difficult to acquire a Nomad firm unless you are
already a Nomad. In this last financial year, we saw that potentially being
a Nomad is a poison pill due to the fact that you cannot be acquired. We saw
with Arden Partners that this caused the value of the business to be
effectively zero when Ince acquired it as it was then passed to Zeus Capital
for a net zero consideration. The number of Nomad firms has shrunk to a
current level of 26 compared to over 70 firms 10 years ago. We believe there
may be change as it does appear there will be a shake-up of the rules and
approach to the 3 different markets of AIM, the Standard Listing and the
Premium listing. We view this as good news and an opportunity for firms with
high quality people and capabilities to be more active on the LSE. We have
seen the merger of Finncap and Cenkos, and we would expect more mergers to
take place. Numis is not merging with Deutsche Bank, but is being acquired as
part of consolidation in the sector, and we believe further acquisitions will
take place, as bigger banks that felt London was no longer on their radar
after Brexit, reconsider as there has not been the anticipated outflow of
business across the Channel.
Most of the UK domestic brokers were formed or grew rapidly around the 2000's
as many entrepreneurial brokers in their 40's wanted to get away from the
rigid structures of big banks. These entrepreneurs are now in their 60's,
but one issue they face is that the younger generation now in their 40's no
longer want to run or own their own broking business, as they are just not
nearly as attractive due to weaker economics and vastly increased
regulation. This again is likely to lead to more consolidation or
acquisitions.
Outlook
Last year I said we were cautiously optimistic despite the worsening
conditions for global markets that are unlikely to improve for some time. I
was right on both points. We expect to report a loss at the interim stage.
This is due to our year end being March and as the three quietest months in
our industry - April, July and August - all fall in our first half.
Nevertheless this year, I am slightly more cautious but remain optimistic as
we head towards 2024 as we have a good client base and are engaged on a broad
range of strategic advisory, M&A and fundraising mandates. Our Position
in Transitional Energy is also attracting a lot of attention particularly in
the USA and Asia and we expect some major developments in the future.
We can but hope that a clearer global picture emerges which has been clouded
in the last three years by Covid, the Ukraine war, global political tension,
inflation at record levels, an energy crisis, and interest rates going up
substantially. Let's hope that not much more will be thrown at us!
Whatever happens, we are in good shape with a great team.
Andrew Monk
CEO
Key performance indicators
Reported (accounting) profit
Year ended 31 March 2023 Underlying Profits
£611,531 comprising £280,761 profit on ordinary activities before taxation
plus amortisation of £330,770 (2022: £399,144)
Cash at 31 March 2023
£1.27m (2022: £2.01m)
Retained Corporate Clients at 31 March 2023
24 clients of VSA Capital Limited (2022: 24)
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
Notes 2023 2022
£ £
Turnover 2 4,358,875 3,605,562
Cost of sales (166,179) (175,761)
Gross profit 4,192,696 3,429,801
Other operating income 39,000 34,750
Administrative expenses (3,090,564) (2,954,406)
Operating Profit 1,141,132 510,145
Finance (expenses)/income 4 (721) 736
Gains/(losses) on investments 4 (859,650) (442,507)
Profit on ordinary activities before taxation 280,761 68,374
Tax on Profit on ordinary activities 5 (33,218) (26,482)
Profit for the year 247,543 41,892
Other Comprehensive Income - -
Total Comprehensive Income 247,543 41,892
EARNINGS PER SHARE - PROFIT AFTER TAX Notes pence pence
Basic 7 1.3 0.2
Diluted 7 0.8 0.1
The statement of comprehensive income has been prepared on the basis that all
operations in the year ended 31 March 2023 are continuing operations.
There were no discontinued operations during the current financial year.
GROUP AND COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 MARCH 2023
2023 2022 2023 2022
Notes Group Group Company Company
ASSETS £ £ £ £
Non-current assets
Property, plant & equipment - owned 77,515 107,764 - -
Property, plant & equipment - right of use 468,900 645,253 - -
Intangible assets 992,311 1,323,081 - -
Investment in subsidiaries - - 3,873,996 3,873,996
Total non-current assets 1,538,726 2,076,098 3,873,996 3,873,996
Current assets
Investments 2,141,416 691,769 6,322 12,716
Trade and other receivables 381,464 536,932 49,041 1,532
Cash and cash equivalents 6 1,273,122 2,010,003 267,292 339,625
Total current assets 3,796,002 3,238,704 322,655 353,873
TOTAL ASSETS 5,334,728 5,314,802 4,196,651 4,227,869
EQUITY AND LIABILITIES
Share capital 3,523,547 3,523,547 3,523,547 3,523,547
Share premium 418,057 418,057 418,057 418,057
Share-based payments reserve 13,892 51,585 13,892 51,585
Accumulated profits/(losses) 416,637 169,094 214,159 218,990
Total equity 4,372,133 4,162,283 4,169,655 4,212,179
LIABILITIES
Current liabilities
Trade and other payables 529,199 557,408 26,996 15,690
Finance liabilities - borrowings 216,566 107,623 - -
Total current liabilities 745,765 665,031 26,996 15,690
Non-current liabilities
Finance liabilities - borrowings 216,830 487,488 - -
TOTAL EQUITY AND LIABILITIES 5,334,728 5,314,802 4,196,651 4,227,869
The financial statements were approved by the Board of Directors on 26 June
2023 and were signed on its behalf by:
Andrew
Monk
Andrew Raca
Director
Director
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Share Capital Share Premium Share based payments reserve Retained Earnings Total
£ £ £ £ £
177,524 25,786 127,202 3,975,772
At 1 April 2022 3,645,260
Total comprehensive income
- - - 41,892 41,892
12,027 240,533 - - 252,560
Share issue
Company purchase of own shares into Treasury
(133,740) - - - (133,740)
Movement in share based premium reserve
- - 25,799 - 25,799
3,523,547 418,057 51,585 169,094
At 1 April 2023 4,162,283
Total Comprehensive Income
- - - 247,543 247,543
Movement in share based premium reserve
- - (37,692) - (37,693)
At 31 March 2023 3,523,547 418,057 13,892 416,637
4,372,133
GROUP AND COMPANY CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
2023 2022 2023 2022
Group Group Company Company
Notes £ £ £ £
Net cash generated/(used) in operating activities
Profit / (loss) before income tax 280,761 68,374 (4,831) (158,212)
Tax paid - (19,740) - -
Depreciation and amortisation 540,043 521,947 - -
Loss / (gain) on current asset investments 859,650 438,628 6,394 9,403
Sales settled by shares (2,277,074) - - -
(Increase)/decrease in trade / other receivables 107,468 (301,565) (47,509) 112
Increase / (decrease) in trade / other payables (13,427) (504,770) 11,306 15,252
Change in share based payments reserve (37,693) 25,799 (37,693) 25,799
NET CASH (GENERATED)/USED IN OPERATING ACTIVITIES (540,272) 228,673 (72,333) (107,646)
Net cash generated from/(used in) investing activities
Proceeds from disposal of plant, property and equipment - 212,808 - -
Purchases of plant, property and equipment (2,671) (252,540) - -
Proceeds from other investing activities 280,215 210,262 - 57,015
Other investments - additions (312,437) (177,167) - (3,377)
Dividends received - - - 250,000
NET CASH (GENERATED)/USED IN INVESTING ACTIVITIES (34,893) (6,637) - 303,638
Cash flows from financing activities
Share capital issue - 252,560 - 252,560
Purchase of shares into treasury - (133,740) - (133,740)
Finance lease repayments (161,716) (194,638) - -
NET CASH GENERATED/(USED) FROM FINANCING ACTIVITIES (161,716) (75,818) - 118,820
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (736,881) 146,218 (72,333) 314,812
Cash and cash equivalents at beginning of period 2,010,003 1,863,785 339,625 24,813
CASH AND CASH EQUIVALENTS AT END OF PERIOD 6 1,273,122 2,010,003 267,292 339,625
A prior year adjustment has been made to the cash flow statement to reflect
the fact that the tangible fixed asset purchases were not all in cash. The
adjustment was to reduce the purchase of tangible fixed assets by £595,111 to
£252,540 and the finance lease liability reducing by the same amount to
£194,638.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
1 Statutory Information
VSA Capital Group plc is a public limited company limited by shares, is listed
on the Aquis Stock Exchange, is incorporated in the UK and registered in
England and Wales (Company Number 04918684). The Company's registered and head
office is at Park House, 16-18 Finsbury Circus, London, United Kingdom, EC2M
7EB.
2 Revenue
Segmental reporting
Group Revenue of £4,358,875 (2022: £3,605,562) comprises:
Corporate Finance fees of £3,455,272 (2022: £2,797,340);
Broking fees of £711,950 (2022: £578,069);
Bond trading of £85,212 (2022: £85,462),
Research fees of £102,083 (2022: £138,750); and,
Other income of £4,358 (2022: £5,941).
3 Employees and Directors (Group)
31/3/23 31/3/22
£ £
Wages and salaries 1,738,138 1,763,882
Social security costs 223,792 217,903
Other pension costs 32,526 33,926
1,994,456 2,015,711
The average number of employees during the year was as follows:
31/3/23 31/3/22
Directors 5 5
Corporate finance 6 6
Research and sales 7 9
Account and administration 3 2
21 22
4 Net finance costs
Finance income: deposit account interest 2023: £1,936 2022: £736
Financial Income 2023: £1,936 2022: £736
Finance costs: finance lease interest 2023: (£1,035) 2022: (£13,282)
Finance costs: other interest 2023: (1,622) 2022: £NIL
Financial Expenses 2023: (2,657) 2022: (13,282)
Total 2023: (£721) 2022: (£12,546)
5 Taxation
Analysis of the tax charge
Corporation tax is payable on investment income.
Factors affecting the tax charge
The tax assessed for the year is lower than the standard rate of corporation
tax in the UK. The difference is explained below:
2023 2022
£ £
Profit on ordinary activities before tax 280,761 68,374
Profit on ordinary activities multiplied by the
standard rate of corporation tax in the UK of 19% (2022: 19%) 53,345 12,991
Effects of:
Tax losses utilised (75,768) (12,991)
Tax paid on Investment Income 8,338 26,482
Other adjustments 47,303 -
Tax Charge 33,218 26,482
Due to the uncertainty of the timing of taxable profits for the Company in the
future, a deferred tax asset in respect of the tax losses has not been
included in the accounts. Tax losses of £2.7m (2022: £2.9m) have been
carried forward as at 31 March 2023. The rate of corporation tax is set to
rise to 25% in 2023.
6 Cash
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Cash at bank 1,273,122 2,010,003 267,292 339,625
7 Profit & Loss Per Share
As at 31 March 2022 As at 31 March 2022
Audited Audited
Basic
Profit/ (Loss) for the period attributable to owners of the Company (£) 247,543 41,892
Weighted average number of shares: 19,428,966 19,428,966
Basic earnings/(loss) per share (pence): 1.3 0.2
Diluted
Profit/ (Loss) for the period attributable to owners of the Company (£) 247,543 41,892
Weighted average number of shares: 30,944,566 30,279,466
Diluted earnings/(loss) per share (pence): 0.8 0.1
The basic and diluted earnings per share were determined by dividing the
profit or loss attributable to the equity
holders of the Company by the weighted average number of shares outstanding
during the periods.
8 Annual Report and Accounts
Copies of the 2023 Report and Accounts will be posted to shareholders
shortly. Copies will also be available from the Company's registered office
and from the Company's website www.vsacapital.com
(http://www.vsacapital.com)
The statutory accounts for the year ended 31 March 2023 will be delivered to
the Registrar of Companies in due course.
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