MARKET REPORT: FinnCap slides as misery mounts for stockbrokers

Finncap became the latest City broker to report falling earnings as it warned financial market turmoil was likely to last into next year.

The company’s woes came to light when CEO John Farrugia, who was appointed in September, announced sweeping job cuts, would cut office space and not issue an interim dividend to shareholders.

The hard medicine was needed after Finncap posted a 48 per cent drop in revenue to £16.4 million in the six months to September compared to a year earlier.

The broker also made a £2.6 million loss after making a £6.3 million profit 12 months ago.

In a sign of the sharp downturn, the City broker advised on just 11 private M&A deals worth around £430 million, compared to 13 deals worth £1 billion a year earlier.

It is the final blow to investors who had hoped the company would be acquired by Bob Diamond’s Panmure Gordon in October.

Panmure is majority owned by Diamond’s vehicle Atlas Merchant Capital and run by his former Barclays colleague Rich Ricci.

But that £37m deal was called off at the end of November after the two sides failed to reach an agreement.

Finncap was founded in 2007 by Sam Smith, the only woman ever to run one of London’s stock brokers.

The deal would have earned Smith and other shareholders like Jon Moulton a hefty payday before Christmas.

Stock watch – WANDisco

Investors in WANdisco cheered after the value of a customer’s contract rose for the second time this year.

The software company signed a £4.1 million contract with a major European car supplier in July, which was extended to £9.8 million in October. It has now been increased to £20.6 million.

The group was tasked with moving the customer’s data to the Amazon Web Services (AWS) cloud platform.

Shares rose 8.3 percent, or 53 pence, to 690 pence.

Stockbrokers in the city have struggled over the past year, hit by a lack of IPOs, capital raises and declining investor sentiment.

Finncap is no different. Fellow City broker Numis reported last week that turnover was down 33 per cent to £144.2m for the year to September, while profits fell 72 per cent to £20.9m.

Finncap shares fell 6.9 percent, or 1.03 pence, to 13.88 pence.

Better news: the FTSE 100 rose 0.8 percent, or 56.92 points, to 7502.89 and the FTSE 250 gained 1.4 percent, or 266.85 points, to 19086.29.

Brent crude oil prices climbed 3.6 percent to finish the day above $80 a barrel, buoyed by hopes that China would ease its Covid measures. BP (+1.9 percent, or 8.95p, to 471.05p) and Shell (plus 1 percent, or 22.5p, to 2318p) both benefited.

But among the other household names, Rolls-Royce fell 2.4 percent, or 2.23 pence, to 90.61 pence after JP Morgan said the jet engine maker needs “short-term pain” to achieve “long-term gains.” .

The broker highlighted what he saw as a range of concerns, including Rolls-Royce’s weak balance sheet and earnings.

Further up the rankings, things looked good for Capita, with the outsourcing giant on track to divest more of its non-core businesses in the first half of next year.

The group has raised £462 million by 2022 through the sale of companies such as payment service company Pay 360.

In an update, the company said sales were up 2 percent in the 11 months to November. Shares rose 8.8 percent, or 2.02 pence, to 25 pence.

Elsewhere, IHG shares added 0.5 percent or 25 pence to 4986 pence after it appointed a finance boss.

The owner of Holiday Inn and Crowne Plaza said America’s finance chief Michael Glover will take up his role in March next year following Paul Edgecliffe-Johnson’s decision to step down.

At Chemring, shares rose 1.2 percent, or 3.5 pence, to 305 pence after brushing aside months of economic turmoil to finish the fiscal year on a high.

Full-year results beat the defense group’s expectations, with revenue up 13 percent to £442.8 million for the 12 months to October. Profits, meanwhile, rose 12 percent to £62.5 million.

The group also acquired data analytics company Geollect last week.