Unaudited Interim Report to 30 September 2024
27/12/2024 07:00
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RNS Number : 3449R VSA Capital Group PLC 27 December 2024
27 December 2024
VSA CAPITAL GROUP PLC
("VSA Capital" "VSA" or the "Company")
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
VSA Capital Group plc (AQSE: VSA) announces its interim results for the half
year ending 30 September 2024.
Successful first half in difficult market conditions and a cautiously
optimistic outlook for the future.
Highlights
· Turnover of £1.76m
· EBITDA of £0.62m
· Cash position of £0.94m
· NAV of £2.36m
· NAVPS of 10.4p
· Retained Corporate Clients - 29
Chairman's Interim Report
I am pleased to be able to introduce our interim results for the six months
ended 30 September 2024 after a very difficult previous year. We have
recovered considerably and moved back into our more accustomed position of
profitability. We could not have done this without the hard work and
determination of our staff under challenging conditions and I pay tribute to
them.
Market conditions are improving. We have an increased portfolio of client
companies and a good pipeline of transactions as we enter 2025. The new
strategic partnership with Drakewood Capital Management Limited has
considerable potential to enhance our offering to clients in the natural
resources arena and alongside activities in our other sectors.
Notwithstanding the challenging geopolitical and economic conditions, we
look forward to the months ahead with cautious optimism.
Mark Steeves
Chairman
27 December 2024
CEO Interim report
The six months between April and September 2024 have seen incredible highs,
and also sadly lows, mainly due to macro conditions. We have completed an
important strategic move with Drakewood Capital Management Limited
("Drakewood") that puts us in a much stronger position for the future,
especially in the natural resources and transitional energy sectors. The
good news is that we are reporting a profit and a strengthened balance sheet,
but equity capital markets remain incredibly tough and as I have said before
although I believe we perform better than our peer group, this is not a
relative game.
Deal flow in equity capital markets ground to a halt over the summer following
the Labour election victory and subsequent period of waiting for the budget.
Sadly, it appears that the Government has little appetite to stimulate the
London equity capital markets in just the same way that the previous
government did. The UK needs growth in its economy and growth is not created
by tax, but by investment, and investment requires a healthy stock exchange
and incentives for investors to take risks. Only when a government
understands this simple economic issue will we see a reversal of the downward
trend our stock market has been facing. London has slipped from being the
pre-eminent global stock exchange to only 6th in the world and as this decline
takes place, we can see our own economy slipping globally as the two are
inextricably linked.
Although UK institutions have limited capability left to invest in our sectors
due to asset allocators directing flows away from the UK mainly to the USA, we
have at VSA managed to complete various deals by sourcing 'strategic
investors' for our corporate clients. We continue to work on both public and
private transactions and have the capability to work on substantial projects,
as demonstrated by our role acting as financial adviser and broker to Invinity
Energy Systems on their £57m fundraising in May.
Our capabilities are helped by the global reach for funding that we deploy for
our corporate client base. By actively marketing overseas and building new
relationships, we have been able to source funds and deals from areas as
diverse as Texas, Detroit, Hong Kong, South Korea and Leeds (not very
international, but not London!). These were deals for most notably, Invinity
Energy Systems and Prospex Energy. We are working on other transactions
where we have been engaged by a number of companies to source strategic
investors and we expect to win more because we are strong in this area with
our global reach, and this differentiates us from other investment banks and
brokers who invariably are more focused on UK institutions. These projects
take much longer, and the timing is less predictable, but I believe it is a
great differentiator for VSA especially in the resources and transitional
energy sectors. Of course, our relationships among UK and European investors
remain strong and accessible on behalf of our corporate clients.
Our VSA Lite service also shows how we can successfully differentiate
ourselves as our client base here has grown well and, inevitably, Lite clients
like the VSA experience and are beginning to move up to become full-service
clients. This has enabled us to increase our client base in a market where
the number of listed companies is declining rapidly. This has been described
as being like a "no frills airline model" where entry level simply gets you a
seat, but if you want to take bags or speedy boarding you pay more, or in our
case we provide research, corporate finance advice and fund raising.
We are also "broker exempt" under MIFID 2. This has never been fully
appreciated, but what it means is that our research is freely available.
When we undertook the fundraising for Equipmake, this ability came into its
own. We were able to write "insiders research" for investors whereas the
lead adviser was unable to as it is not allowed to do so under MIFID 2. This
probably made the difference between success and failure. We intend to use
this capability more to win more clients, but most listed companies are not
aware of the difference this can make.
It was a pleasure to welcome Drakewood onto our shareholder register at the
start of September with their investment of £405,000 for 19.9% of the
Company. This strengthened our balance sheet, and more importantly has given
us a great partner to work with. We are already seeing the benefits, with
new client wins and good exchanges of ideas. This is just the start of the
relationship and Drakewood are very supportive of our ideas for the future,
and we are beginning to explore joint business opportunities. I believe this
will boost our capabilities in the natural resources sector and especially
mining where the number of credible players has shrunk during what has been a
15-year drought for investment. The sector has to recover as the world
cannot exist without it, despite what certain protest groups may think. I am
very excited by what we can achieve and if the tide does turn the partnership
has the potential to be very remunerative. I welcome Mark Thompson to our
Board as their representative and Mark is full of brilliant ideas which we can
take and turn into deal flow.
Over the summer we were still cleaning up some legacy issues from our 2023
annus horribilis and I believe that we have now satisfactorily put them all to
bed as frankly it was no fun. Our previous Finance Director, Marcia Manarin,
also decided to move on to Oberon Investments where we wish her well. I was
very pleased to do a 'swap' and we have recruited Galin Ganchev who was
formerly the Finance Director at Oberon Investments. This has meant there
has been no disruption and Galin is already making a great contribution in
ensuring our internal systems and financial controls remain robust and fit for
purpose. VSA has always had junior staff moving on to bigger firms (but
maybe worry less about the P&L as a small firm like VSA has to), but large
firms also are unable to offer the same culture, which I believe is greatly
appreciated by our existing staff. Currently we have not recruited where a
few people have left, but instead allowed our headcount to reduce. In the
current market conditions a controlled cost base is vital and it is quite easy
to increase headcount at the right time, especially as I suspect many of the
larger banks will be looking at their own cost bases and looking to reduce
headcount. Also, very large client bases may feel good, but they can also be
less profitable as the 80:20 rule can be so accurate; where 80% produce very
little return, but require as much attention as the 20% doing deals and
creating profit. By keeping a tight structure, I hope we can even that gap.
In summary the first six months have been profitable, which is good. There has
been some very hard work in tricky macro conditions, leaving us in a
cautiously optimistic position for our full year to end March 2025. In the
last month or so our deal pipeline has grown significantly, which although we
may not close all by our year-end, will be good for business and as I have
said before, our year-end is just a date and not a make or break one. We
then just have to live in hope that politicians will wake up to the benefits
of a healthy stock market and actually try and stimulate investment and
activity and grow the UK economy.
Andrew Monk
CEO
27 December 2024
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, CEO
Andrew Raca, Head of Corporate Finance
Galin Ganchev, Finance Director & COO
AQSE Exchange Growth Market Corporate Adviser
Alfred Henry Corporate Finance Limited +44 20 8064 4056
Nick Michaels / Maya Klein Wassink enquiries@alfredhenry.com (mailto:enquiries@alfredhenry.com)
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD TO 30 SEPTEMBER 2024
Six months Six months Year ended
ended ended 31 March 2024
30 September 2024 30 September 2023 Audited
Unaudited Unaudited
£'000 £'000 £'000
£ £ £
Turnover 1,758 1,051 1,887
Cost of sales (81) (89) (180)
Gross profit 1,677 962 1,707
Other operating income 20 20 54
Administrative expenses (1,347) (1,473) (2,828)
Operating profit / (loss) 350 (491) (1,067)
Finance income 3 1 6
(Losses) / gains on investments (55) (1,325) (1,670)
Profit / (loss) on ordinary activities before taxation 298 (1,815) (2,731)
Tax on profit / loss on ordinary activities - - 37
Profit / (loss) for the year 298 (1,815) (2,694)
Other Comprehensive income - - -
Total Comprehensive income 298 (1,815) (2,694)
Earnings per share - profit after tax
pence pence pence
Basic 0.8 (4.8) (7.2)
Diluted 0.6 (4.8) (7.2)
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
As at As at As at
30 September 2024 Unaudited 30 September 2023 Unaudited 31 March
£'000 £'000 2024
Audited
£'000
Non-current assets
Property, plant and equipment - right of use 204 380 292
Property, plant and equipment - owned 34 65 52
Intangible Assets 495 827 662
Deferred tax asset 54 - 54
Total non-current assets 787 1,272 1,060
Current assets
Trade and other receivables 712 323 798
Investments 302 1,106 375
Cash and cash equivalents 939 546 229
Total current assets 1,953 1,975 1,402
Total assets 2,740 3,247 2,462
Current liabilities
Trade and other payables 198 365 512
Finance liabilities - borrowings 108 162 217
Total current liabilities 306 527 729
Non-current liabilities
Finance liabilities - borrowings - 163 -
Deferred tax liability 73 - 73
Total non-current liabilities 73 163 73
Total liabilities 379 690 802
Equity
Share Capital 3,703 3,524 3,524
Share premium account 644 418 418
Share-based payments reserve 3 13 5
Accumulated profits/(losses) (1,989) (1,398) (2,287)
Total equity 2,361 2,557 1,660
Total Equity and Liabilities 2,740 3,247 2,462
CONSOLIDATED GROUP CASHFLOW STATEMENT
FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2024
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March
2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Profit / (loss) before income tax 298 (1,815) (2,731)
Tax paid - - (46)
Depreciation and amortisation 269 270 536
Loss / (gain) on current asset investments 55 1,325 1,670
Decrease / (increase) in trade and other receivables 86 (234) (275)
(Decrease) / increase in trade and other payables (314) (164) 29
Change in share-based payments reserve (2) - (9)
NET CASH USED IN OPERATING ACTIVITIES 392 (618) (826)
Cash flows from investing activities
Purchase of plant, property and equipment - (3) (3)
Proceeds from other investing activities 22 37 101
Purchase of other investments - (34) (99)
NET CASH GENERATED FROM INVESTING ACTIVITIES 22 - (1)
Cash flows from financing activities
Share capital issue 405 - -
Purchase of shares into treasury - - -
New finance leases - - -
Finance lease repayments (109) (109) (217)
NET CASH GENERATED FROM FINANCING ACTIVITIES 296 (109) (217)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 710 (727) (1,044)
Cash and cash equivalents at beginning of period 229 1,273 1,273
CASH AND CASH EQUIVALENTS AT END OF PERIOD 939 546 229
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD TO 30 SEPTEMBER 2024
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 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 2024 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 2024
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 2023 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 2024.
3 Profit or loss per share
Six months ended 30 September 2024 Six months ended 30 September 2023 Year ended 31 March 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Basic
Profit / (Loss) for the period attributable to owners of the Company 298 (1,815) (2,695)
Weighted average number of shares: 38,319,200 37,655,266 37,655,266
Basic earnings / (loss) per share (pence): 0.8 (4.8) (7.2)
Diluted
Profit / (Loss) for the period attributable to owners of the Company 298 (1,815) (2,695)
Weighted average number of shares: 49,575,238 37,655,266 37,655,266
Diluted earnings / (loss) per share (pence): 0.6 (4.8) (7.2)
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.
4 Called up share capital
On 29 August 2024 the Company entered into a strategic partnership with
Drakewood Capital Management Limited ("Drakewood"). As part of the strategic
partnership the Company issued 4,500,000 new ordinary shares in the Company at
a price of 9p per share to Drakewood raising gross and net proceeds of
£405,000. As at 30 September 2024 the Company has allotted, issued and fully
paid 23,928,966 Ordinary Shares and 18,226,300 Deferred Shares. The Deferred
Shares were created as part of a capital restructuring in preparation for the
IPO, which took place on 29 July 2021. The Deferred Shares have been
compulsorily acquired by the Company Secretary and held on behalf the
Company.
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