Half-year Report
15/12/2021 06:59
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RNS Number : 6572V VSA Capital Group PLC 15 December 2021
15 December 2021
VSA CAPITAL GROUP PLC
("VSA Capital" "VSA" or the "Company")
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
VSA Capital Group plc (AQSE: VSA), announces its interim results for the half
year ending 30 September 2021.
Chairman's Interim Report
I am delighted to introduce the first interim report since the Company floated
on the Aquis Growth Market on 9 September 2021.
On 31 March 2021, the Company acquired VSA Capital Limited ("VSA Capital"), an
international investment banking and broking firm with offices in London and
Shanghai, and a joint venture in Kenya. VSA Capital provides corporate
finance, advisory and capital markets services to growth companies, both
private and public, across multiple sectors with a particular focus on natural
resources, transitional energy, alternative energy, consumer products and
Technology, Media and Telecoms ("TMT"). On that date, VSA Capital Group
plc changed its status from being an investing company to being an operating
group. In practical terms, this means that reporting is now being made under
IFRS reporting standards, consolidating the results and balance sheets of its
100% owned (and other future controlled) subsidiaries, rather than as a
standalone company.
This report presents VSA Capital Group plc as a trading group quoted on the
AQSE Growth Market. Its stated objective has been to generate an attractive
rate of return for shareholders, predominantly through capital appreciation,
by taking advantage of opportunities principally to invest in the TMT and
financial services sectors, including in other investment companies.
We are reporting losses; however, results would have been significantly better
if there had not been delays in closing some of our deals - for example the
IPO of Tungsten West plc, which was due to close in September but slipped into
October, brought in over £1m of revenue. Clearly this income will make a
significant positive impact on the Group's performance in the second half.
Furthermore, VSA Capital's strategy is to hold investments in its corporate
clients. We expect our investments in Tectonic Gold plc (specialist
Intrusion Related Gold System - IRGS - explorer), Invinity Energy Systems plc
(founded to build utility-grade energy storage - flow battery provider) and
Samarkand Global plc (cross-border eCommerce technology company focused on
Western brands selling into China), amongst others, to give us a good return
as they execute further on their business plans.
In the immediate future we will focus on deriving value from our wholly owned
subsidiary, VSA Capital Limited. That focus will be led by our CEO, Andrew
Monk, leveraging the significant increase in the Group's balance sheet and the
Company's absolute determination to be a strong player advising and raising
funds for small and medium sized public and private companies internationally.
Mark Steeves
Chairman
15 December 2021
CEO Interim report
The last 21 months since the Coronavirus pandemic broke out have been
unprecedented for everyone, and our industry has seen extraordinary conditions
and market activity has picked up considerably. Larger broking firms with
large, retained client bases have executed unprecedented numbers of secondary
fundraises. At VSA Capital we have a smaller retained client base and so have
not benefitted as much, but there has been no doubt that getting deals funded
has become considerably easier and the IPO market has been wide open and as a
firm we have benefited. We have been very careful though to ensure that
where we have brought a company to the market, we have priced it correctly to
get a good result for the company, for its existing shareholders and new
investors joining the shareholder list. In our view, this is vital to
maintain our reputation as well as to protect the longer-term interests of the
company concerned. Too many large IPOs have been badly priced and led to an
uncomfortable aftermarket. To quote a well-known fund manager "everyone needs
a party balloon" and we endorse that.
At first it appears disappointing to report an EBITDA loss of £2,700 and a
loss of £238,400. Sadly, in today's world accounting practices don't always
reflect a true indication of a company's performance. If you looked at our
internal management accounts which we use to really understand the performance
of the company, they show a profit of £56,000. EBITDA is not my preferred
measure but does eliminate issues such as amortisation of unused staff
holidays and amortisation of property leases which really are not appropriate.
I am not a fan of adjusted profits, but we did incur a one off cost of our
IPO. In my view the best measure of a company's performance is cash flow but
again because we often take equity instead of cash so this can give a false
impression and growth of net assets is perhaps a better measure for VSA. The
fact that accounting has now got overly complicated does mean that there are
opportunities for good analysis to show when markets have wrongly priced
equities and that can be hugely beneficial to those such as ourselves who are
capable of that sort of analysis.
Whatever measure of profit or loss you take it is already totally out of date.
VSA Capital has always been second half biased and our expectation for the
full year are unchanged. September 30(th) is just a date and doesn't give a
full picture. In the two and a half months since our interim period end the
business has performed very strongly. Our pipeline for the final quarter is
also healthy. Having said that one should never take these market conditions
for granted and so we constantly aim to build on our corporate client list and
be creative with new deals and use clever thinking to solve issues faced by
companies. We also, alongside that, maintain a tight control on our cost base.
The last 21 months has been a challenging time for managing a business when
lockdowns are imposed by our government. Since lockdown ended on July
19(th) there has been a lot of debate about the pros and cons of working from
home ("WFH"). At VSA we believe that the office environment is very important
for a variety of reasons, but also recognise that in other industries these
may not apply. The office encourages good regular communication and idea
generation, which is at the heart of our industry. It allows junior staff to
learn and so needs senior staff to pass on knowledge. Furthermore, it creates
a much healthier social life, interacting with other people and not being
stuck in maybe a one-bedroom flat all day and night. We have also seen from
experience that when doing deals, investing clients who had a physical 1:1
meeting have always invested significantly more than those who attended
meetings via a video call. For that reason, we have actively encouraged
staff to return to the office within Government guidelines and ensuring we
have a safe environment with weekly COVID testing. What this has also
allowed us is to take a pragmatic approach to give employees flexible working
arrangements when it is appropriate, and I believe the team spirit at VSA is
currently as strong, if not better, than ever. Having everyone in the office
means that we were not in a position to downsize when we moved office at the
end of November to Park House on Finsbury Circus.
I am delighted that we achieved a successful IPO on the Aquis Growth Market.
As well as ensuring we have a strong core business, we stated in our Admission
Document three pillars of growth. We are firm supporters of Aquis as an
alternative market to the LSE. In the last six months we have continued to
grow our client list on Aquis and I believe we can regard ourselves as the
leading adviser for this market. London needs a competitive environment to
grow post Brexit and a serious competitor to the LSE will stimulate demand and
activity and we believe it is inevitable that Aquis will become the "Nasdaq of
London". That was a major reason we listed VSA on Aquis. We have an
unprecedented strength and knowledge across the whole value chain of the
Transitional Energy revolution from mine to battery and grid services, across
solar, wind and hydrogen through to energy storage and then also to EV
charging and e-mobility. The world is going through an unprecedented change
and smart cities are the future; at VSA we understand the whole process and
value chain. Our Third pillar is our international capability with our office
in Shanghai and joint ventures in Africa. This has not been easy due to the
pandemic and the inability to travel and until travel resumes, especially to
China, cross border activity is likely to stay subdued; however, in the longer
term this capability can become very valuable, and it is not easy to build.
We have also in the interim period being reported on had other useful areas of
growth for the business. The most notable being the growing of a 'qualified
investor base' of High Net Worth ('HNW'] investors. We have added over 200
HNWs and this additional pool of capital has proved very valuable for our
transactions, and we will continue to grow it. The deal size of these
investors has surprised us and ranges between £10,000 and £2mn, with many
quite happy to commit around £100,000 per deal. We believe this is an area
that is undergoing major change as institutional brokers look to get access to
retail investors who are very active in the market. The Retail Distribution
Review had the unintended consequences of pushing retail investors away from
institutional brokers and yet they are a key part of any listed company's
shareholder base. At VSA we are pro retail activity but also know we must
stick within FCA rules. This is why we pre-qualify our investor base and also
reach out to all investors through regular podcasts and video blogs and have
also taken the stance of being "Broker Exempt" under MIFID 2 so that we can
distribute our research openly and not just to institutions that pay us. We
believe this puts us at an advantage to our peer group who have not taken that
approach.
The JV with the Shanghai Mining Club and Investing in African Mining Indaba
had a successful hybrid conference in October in Beijing. In the last few
years, it has grown from five companies at the beginning to 12 last year, and
this year to 22; we hope next year to get to 35/40 companies, and we will then
be the established western broker holding an annual mining conference in
Beijing. We have found that companies involved in this conference are then
very receptive to becoming corporate clients of VSA directly.
I have also been pleased in general with the other joint ventures we have in
bond trading, asset management and our crypto/blockchain business Benjiami.
In summary it has been a great six months although very hard work, and we
expect that to continue for the next six months and hopefully much longer, but
we have a good growth plan at VSA that is not competing with others and so
regardless of market conditions we can grow and be confident of the outlook.
Our staff are our most important asset, and so I am pleased to see a strong
team spirit and thank them for their support also of VSA.
Andrew Monk
CEO
15 December 2021
The directors of the Company take responsibility for this announcement.
For further information, please contact:
VSA Capital Group plc +44 20 3005 5000
Andrew Monk - Chief Executive Officer amonk@vsacapital.com (mailto:amonk@vsacapital.com)
Andrew Raca - Head of Corporate Finance araca@vsacapital.com (mailto:araca@vsacapital.com)
Marcia Manarin - Finance Director & COO mmanarin@vsacapital.com (mailto:mmanarin@vsacapital.com)
AQSE Exchange Growth Market Corporate Adviser
Alfred Henry Corporate +44 20 3772 0021
Finance Limited
Jon Isaacs / Jesse Stellato enquiries@alfredhenry.com (mailto:enquiries@alfredhenry.com)
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD TO 30 SEPTEMBER 2021
Six months Six months Year ended
ended ended 31 March 2021
30 September 2021 30 September 2020 Audited
Unaudited Unaudited £'000
£'000 £'000
£ £ £
Turnover 1,163 - -
Cost of sales - - -
Gross profit 1,163 - -
Administrative expenses (1,398) (10) (20)
Operating (loss) / profit (235) (10) (20)
Finance income - 11 214
Interest receivable - - -
Finance costs and similar charges - - -
(Loss) / profit on ordinary activities before taxation (235) 1 194
Tax on profit/loss on ordinary activities 3 - -
(Loss) / profit for the year (238) 1 194
Other Comprehensive income - - -
Total Comprehensive income (238) 1 194
Earnings per share - profit after tax
pence pence pence
Basic (1.2) 11.3 106.5
Diluted (0.8) 10.3 66.4
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
As at As at As at
30 September 2021 Unaudited 30 September 2020 Unaudited 31 March 2021
£'000 £'000 Audited
£'000
Non-current assets
Property, plant and equipment - right of use
Property, plant and equipment - owned 234 0 297
Intangible Assets 11 0 12
Total non-current assets 1,488 0 1,654
1,733
0
1,963
Current assets
Trade and other receivables 876 1 235
Investments 1,152 72 1,164
Cash and cash equivalents 814 25 1,864
Total current assets 2,842 98 3,263
Total assets 4,575 98 5,226
Current liabilities
Trade and other payables 565 1 1,055
Finance liabilities - borrowings 104 0 136
Total current liabilities 669 1 1,191
Non-current liabilities
Finance liabilities - borrowings 23 0 59
Total non-current liabilities 23 0 59
Total liabilities 692 1 1,250
Equity
Share Capital 3,524 136 3,645
Share premium account 418 2 178
Share-based payments reserve 52 26 26
Accumulated profits/(losses) (111) (66) 127
Total equity 3,883 98 3,976
Total Equity and Liabilities 4,575 99 5,226
CONSOLIDATED GROUP CASHFLOW STATEMENT
FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2021
Six months ended 30 September 2021 Six months ended 30 September 2020 Year ended 31 March 2021
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Cash flows from operating activities
Profit / (loss) before income tax (238) 1 194
Tax paid - - -
Depreciation and amortisation 232 - -
Gains on current asset investments (110) (12) (214)
(Increase)/decrease in trade / other receivables (641) 8 7
Increase/(decrease) in trade / other payables (490) - -
Change in share based payments reserve 25 - -
NET CASH USED IN OPERATING ACTIVITIES (1,222) (3) (13)
Cash flows from investing activities
Purchase of subsidiary undertaking - - (3,874)
Purchase of plant, property and equipment (2) - -
Proceeds from other investing activities 124 - 199
NET CASH GENERATED FROM INVESTING ACTIVITIES 122 - (3,675)
Cash flows from financing activities
Share capital issue 118 - 3,685
Finance repayments (68) -
NET CASH GENERATED FROM FINANCING ACTIVITIES 50 - 3,685
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,050) (3) (3)
Cash and cash equivalents at beginning of period 1,864 28 28
- - 1,839
Cash acquired with subsidiary undertaking
CASH AND CASH EQUIVALENTS AT END OF PERIOD 814 25 1,864
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD TO 30 SEPTEMBER 2021
1 General Information
VSA Capital Group plc is a listed public limited company (Aquis: VSA)
incorporated in the UK and registered in England and Wales (Company Number
04918684). The Company's registered office is at Park House, 16-18 Finsbury
Circus, London, EC2M 7EB.
These interim financial statements do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group as at and
for the year ended 31 March 2021 which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union.
The interim financial statements for the six months ended 30 September 2021
are unaudited and have not been reviewed by the Company's auditors Hilden Park
Accountants Limited. The comparative interim figures for the six months ended
30 September 2020 are also unaudited.
2 Basis of
preparation
The accounting policies applied by the Group in the preparation of these
condensed consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements for the year
ended 31 March 2021.
3 Profit or loss per share
Six months ended 30 September 2021 Six months ended 30 September 2020 Year ended 31 March 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Basic
Profit/ (Loss) for the period attributable to owners of the Company (238) 1 194
Weighted average number of shares: 19,428,966 6,787 182,263
Basic earnings/(loss) per share (pence): (1.2) 11.3 106.5
Diluted
Profit/ (Loss) for the period attributable to owners of the Company (238) 194
1
Weighted average number of shares: 30,408,166 7,457 292,484
Diluted earnings/(loss) per share (pence): (0.8) 10.3 66.4
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.
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