Octagonal PLC Trading Update for Trading Subsidiary (1252E)
04 May 2017 - 4:00PM
UK Regulatory
TIDMOCT
RNS Number : 1252E
Octagonal PLC
04 May 2017
For immediate release
4 May 2017
Octagonal plc
("Octagonal" or the "Company")
Trading Update for Trading Subsidiary
Following completion of the reporting period to 31 March 2017,
Octagonal provides the following trading update for its principal
and wholly owned trading subsidiary - Global Investment Strategy UK
Ltd ("GIS").
Highlights
-- Cash in the bank or equivalents as at 31 March 2017 of GBP3.75m
-- Sales increase 34% against FY2016
-- EBITDA increased 109% against FY2016
The Board is very pleased to announce that GIS expects to report
earnings of EBITDA GBP2.26 million, a record for the Group, on
sales of GBP5.64m for the period ended 31 March 2017. This is a
109% increase in profits and 34% in sales from the previous year.
This result reflects the ongoing work we have undertaken to improve
processing efficiencies, client reporting and reducing frictional
costs as well as offering a broader range of services to
clients.
At the same time, the GIS expects to make an impairment charge
this year against two of its pre-RTO non-core legacy investments:
specifically it expects a charge of GBP306,000 against its Level 1
and Level 3 investments, namely Inspirit Energy Holdings PLC,
reducing the carrying value of this investment to approximately
GBP106,000 and also expects to make a full impairment charge this
year against its investment and loan notes in City Golf Club
Limited of GBP233,000.
The Group's audited results will be announced in due course.
John Gunn CEO commented;
"This year has seen the benefit of the work we have done to
further streamline our operations. Margin improvements have enabled
us to deliver strong profit growth, whilst we have also increased
our top line sales.
The year ahead looks positive as we expect to continue seeing
improvement in our operational capabilities and a greater
contribution from our Wealth management, Foreign Exchange and
derivatives activities, which are now all fully integrated into the
business.
This year we expect to book significant write downs against our
pre-RTO non-core investments. As disappointing as this is, it will
simplify the balance sheet and focus the business on our cash
generative goals.
As previously outlined, the Board is committed to making only
long term investments in core activities that are related to our
regulatory permissions and industry sector.
I am also pleased to announce that our regulator the FCA have
now granted GIS additional regulatory permission as an Authorised
Payment Institution. As an Authorised Payment Institution, GIS can
provide payment services in the UK as well as other European
Economic Area ("EEA") states through a cross-border notification
arrangement (known as 'passporting'). GIS can apply to establish a
physical presence in any member state, for example opening an
office, or using an agent based in that state, to provide
cross-border services. This will assist in making GIS better
positioned for Brexit as well as providing further services to our
clients.
Our application for type 1 and 2 regulatory approval in Hong
Kong is underway, but we would not expect to be in operation until
towards the end of this year. This is expected to allow GIS to
expand into Asia offering similar services to those currently
provided to our clients. We will closely monitor these costs, but
we do not see them having any significant impact on our operating
costs. We will start soft marketing in the region shortly and hope
to build on the existing client base we already have there.
We anticipate that our SynerGIS Bond offering, as announced on
22 March 2017, will launch in the next quarter. This activity will
enable SynerGIS to offer depositors (including ISA's) secured fixed
rate deposits. SynerGIS will in turn provide innovative asset
backed acquisition and investment grade financing solutions,
leveraging our international market access and operational treasury
and technology capabilities.
A significant amount of development has gone into building this
opportunity with the creation of Fintech Web and APP based
applications that will enable the depositor to open their GIS
account with automated AML/KYC and payments solutions. Bank
standard Treasury and portfolio management systems are also being
implemented to support our lending activities.
SynerGIS has also made several significant appointments of
personnel who have considerable experience and expertise in
marketing, sales, treasury and lending.
The SynerGIS Bond represents a very exciting opportunity for the
Group, but, as ever, we have remained careful to manage the costs
associated with this for the Group and, to this end, whilst
retaining a 72% interest in Synergis Capital Ltd, the manager of
the SynerGIS Bond, we have now raised funding totalling GBP1.25m to
fund its roll out with GIS investing GBP200k in this funding to
support its majority owned subsidiary.
We will further update Shareholders once the Bond is ready to be
launched."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information please visit www.octagonalplc.com or
contact:
+44 (0) 20
Octagonal Plc 7048 9400
John Gunn, CEO
Beaumont Cornish Limited (Nominated
Adviser and Broker) +44 (0) 20
James Biddle / Roland Cornish 7628 3396
www.beaumontcornish.com
This information is provided by RNS
The company news service from the London Stock Exchange
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