TIDMOCT
RNS Number : 8318G
Octagonal PLC
08 November 2018
8 November 2018
Octagonal plc
("Octagonal" or the "Company")
Interim Results and Trading Update
Octagonal (AIM: OCT), announces its unaudited half-year results
for the six months to 30 September 2018. These include the trading
results for the Company's principle trading subsidiary GIS which,
unlike previous periods, are being announced along with the
consolidated figures for the Group.
Summary of Octagonal PLC Financial highlights for the six months
to 30 September 2018
-- Unaudited revenues for the six months to 30 September 2018
were GBP3.0 million (September 2017: GBP3.35m), the reduction is in
part attributable to the decline in non-core corporate finance
income reported for the same period to sex months to 30 September
2017
-- Unaudited operating profit for the group for six months to 30
September 2018 was GBP0.97m (September 2017: GBP1.05m)
-- Unaudited operating profit excluding costs associated with
Synergis Capital PLC for the six months to 30 September 2018 was
GBP1.23m (2017: GBP1.51m)
-- Net Assets as at 30 September 2018 was GBP9.20m (September 2017: GBP8.22m)
-- Group cash balance as at 30 September 2018 was GBP5.72m (September 2017: GBP5.35m)
For further information please visit www.octagonalplc.com or
contact:
+44 (0) 20 7048
Octagonal Plc 9400
John Gunn, Chairman
Beaumont Cornish Limited (Nominated Adviser
and Broker) +44 (0) 20 7628
James Biddle / Roland Cornish 3396
www.beaumontcornish.com
Trading results for Global Investment Strategy UK Limited
("GIS") for the reporting period:
GIS, the Group's main trading entity reports revenues of
GBP3.016 million and profits of GBP1.29 million for the 6 months to
30 September 2018 compared with GBP3.35 million and GBP1.6 million
respectively, for the six months to 30 September 2017. This revenue
reduction is attributed in part to a decline in non-core corporate
finance income to GBP47,000 (2017: GBP201,000) in the reporting
period. As a result, the net margins reduced to 42.6 % (2017:
47.5%). The core business activity remained in line with internal
targets and per management expectations during a period of
increased market volatility.
Chairman Statement on group activities
Global Investment Strategy UK Ltd (GIS)
We are pleased to report that core settlement and safe custody
business activity remains in line with our expectations during a
period of market volatility.
US Dollar strength favours our business and we anticipate no
significant headwinds from a potential no-deal Brexit scenario.
Whilst our core business remains strong, the management and
wider team continue to focus efforts on the progression of new
projects such as GIS Hong Kong and SynerGIS which will soon add
diversity to the revenue stream of the group.
GIS have recently updated their business continuity plans and
open a fully equipped disaster recovery centre in the City of
London to exceed regulatory requirements and ensure seamless
execution for clients continues in the event of any outage at our
main trading address.
Following the enhancement of the Octagonal website, development
work has commenced for an upgrade to the GIS UK website which will
further highlight our value-add proposition for clients.
SynerGIS
Synergis Capital Plc is a 71.17% owned subsidiary of GIS.
As reported previously, the company has completed preparation of
the Base Prospectus for the offer of debt securities with the
Central Bank of Ireland (CBI) and Euronext Dublin (previously Irish
Stock Exchange) with formal approval expected in due course. Our
dialogue with the Prudential specialists at the Financial Conduct
Authority is ongoing. We have received regular feedback in relation
to the output delivered by our robust financial model which
simulated various stress scenarios for the group and demonstrated
how the wider business could maintain sufficient capital and
liquidity to support the new lending business in each
situation.
We expect these discussions are reaching their final stages and
once approved by the FCA we will immediately submit the completed
prospectus to the CBI and Euronext Dublin for subsequent sign
off.
We have extended our soft marketing of the SynerGIS brand and
the live website (https://www.synergisbonds.com/) continues to
accept pre-applications from clients. We are seeing increased
traffic to our site and positive engagement with our brand and the
firm's sales and marketing plan is in place to coordinate with any
imminent launch.
Against a backdrop of high-profile outages and information
breaches at financial services firms, GIS are pleased to confirm
that we received our Cyber Essentials accreditation from the UK
Government's National Cyber Security Centre. This is confirmation
of the important preparatory work put into this project by GIS.
GIS has further developed a website for its SynerGIS secured
lending business which supports online applications for prospective
borrowers and is in the latter stages of beta testing. This will go
live in conjunction with the launch of the SynerGIS Bonds.
We welcome the FCA consultation paper to enhance the FSCS
compensation scheme to GBP85,000 from GBP50,000 for investments
which is likely to be approved and enter the rulebook in Q2 2019.
Investments into SynerGIS Bonds will fall into the scope of these
rules. The FCA have also proposed an industry "Basic Savings Rate"
which highlights how certain financial institutions are penalising
long term savers with negligible rates - SynerGIS stand ready to
serve them.
Regarding the wider market, new providers such as Goldman Sachs
with their Marcus product (who are rarely wrong with new ventures)
are also identifying the gap in the consumer market targeted by
SynerGIS. The positive reception given to Goldman Sachs' new
venture highlights the appetite neglected UK savers have for
alternative providers.
Global Investment Strategy Hong Kong
The Hong Kong Securities and Futures Commission (SFC) have
advised the company that its application to carry out regulated
activities has been accepted as complete and they have provided us
with a Central Entity Number. We are in the process of onboarding a
new key employee, licenced person and responsible officer (RO)
which is currently going through the rigorous SFC vetting process.
This individual has significant industry experience in the region
and we are confident they can help spearhead our launch into the
region. Feedback and dialogue with the regulator is good and we
hope to make a further positive announcement soon. A dedicated
website for the region with its own unique branding is currently
under construction (http://www.gisfshk.com/) and a client facing
portal is being designed for both English and Chinese speakers.
Work visas for key employees and corporate accounts are now all set
up. We are confident we will soon be able to roll out our key
services to the family offices, institutional and high-net-worth
clients of the Asia Pacific region.
Group Financial Review
The Group reported unaudited revenues of GBP3.006 million and
net profits after tax of GBP0.79 million for the 6 months to 30
September 2018 compared with GBP3.35 million and GBP0.83 million
respectively, for the six months to 30 September 2017. The
reduction in the revenue and profits is in part attributable to the
decline in non-core corporate finance income reported in 2017.
Group net assets and cash rose to GBP9.20m (September 2017:
GBP8.22m) and GBP5.72m (September 2017: GBP5.35m) respectively.
Included in the operating profit above were consolidated 'PLC'
costs for the interim period that remained low at GBP59,000 and
Synergis operating costs for the period were GBP283,000.
Other activities post reporting period:
On 8th October 2018, the Company announced that it had awarded a
total of 1,350,000 Ordinary 0.05 pence shares in the company to
staff and employees.
Dividend
On 28th September 2018, the Company declared a dividend of 0.1
pence per share and was paid on 26th October 2018.
Chairman
John Gunn
Unaudited Group Income Statement and statement of comprehensive
income
For the 6 months ended 30 September 2018
Unaudited Unaudited Audited
----------------------- ----------------------- ---------
30 September 30 September 31 March
2018 2017 2018
----------------------------------
GBP'000 GBP'000 GBP'000
---------------------------------- ----------------------- ----------------------- ---------
Revenue 3,006 3,348 6,502
Cost of sales (643) (745) (1,466)
Gross profit 2,363 2,603 5,036
Administrative expenses (1,391) (1,556) (3,220)
Share based payment expense (228)
Operating profit 972 1,047 1,588
Other gains and losses - - (71)
Finance income - - -
Profit before tax 972 1,047 1,517
Taxation (185) (220) (492)
Profit for the year 787 827 1,025
Attributable to:
Shareholders in the Parent
Company 869 932 1,276
Non-controlling Interests (82) (105) (251)
787 827 1,025
Earnings per share attributable
to owners of the parent company
Basic and diluted (pence
per share)
From continuing and total
operations 0.153p 0.166p 0.226p
Fully diluted 0.150p - 0.221p
Unaudited Group Statement of Financial Position
As at 30 September 2018
Unaudited Unaudited Audited
------------- ---------------------- ---------
30 September 30 September 31 March
2018 2017 2018
-----------------------------
GBP'000 GBP'000 GBP'000
----------------------------- ------------- ---------------------- ---------
Non-Current assets
Goodwill 2,869 2,869 2,869
Other Intangibles 503 169 409
Property, plant and
equipment 68 77 60
Deferred Tax asset 67 67 66
3,507 3,182 3,404
----------------------------- ------------- ---------------------- ---------
Current assets
Available for sale
investments 31 108 31
Trade and other receivables 796 574 521
Cash and cash equivalents 5,717 5,349 5,324
6,544 6,031 5,876
TOTAL ASSETS 10,051 9,213 9,280
Current liabilities
Trade and other payables 225 309 285
Current tax liabilities 626 681 582
Borrowings - - -
851 990 867
----------------------------- ------------- ---------------------- ---------
Non-Current liabilities
Borrowings - - -
----------------------------- ------------- ---------------------- ---------
NET ASSETS/(LIABILITIES) 9,200 8,223 8,413
------------------------------ ------------- ---------------------- ---------
Equity
Share capital 284 1,104 284
Share premium account 171 3,669 171
Reverse acquisition
reserve 679 679 679
Share option and warrant
reserve 99 - 99
Retained earnings 7,841 2,518 6,972
------------------------------ ------------- ---------------------- ---------
Equity attributable
to owners of the company 9,074 7,970 8,205
Non- Controlling interests 126 253 208
------------------------------ ------------- ---------------------- ---------
Total Equity 9,200 8,223 8,413
------------------------------ ------------- ---------------------- ---------
Unaudited Group Statement of Changes in Equity
For the 6 months ended 30 September 2018
Share Share Reverse Share Retained Equity Non-controlling Total
capital Premium acquisition option earnings attributable interests equity
reserve reserve to owners
of the
Company
GBP'000 GBP'000 GBP'000 - GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- --------- ------------ --------- --------- ------------- ---------------- --------
Balance at 1,104 3,669 679 - (67) 5,385 - 5,385
31 March 2016
Total
comprehensive
income for the
year - - - - 1,035 1,035 (33) 1,002
Adjustment
arising
from change in
non-controlling
interest - - - - 180 180 70 250
----------------- --------- --------- ------------ --------- --------- ------------- ---------------- --------
Balance at 1,104 3,669 679 -- 1,148 6,600 37 6,637
31 March 2017
Total
comprehensive
income for the
year - - - - 1,276 1,276 (251) 1,025
Capital
reduction (824) (3,669) - - 4,493 - - -
Dividend Paid - - - - (568) (568) - (568)
Shares issued 4 171 175 - 175
Share based
payment
expense - - - 99 - 99 - 99
Adjustment
arising
from change in
non-controlling
interest - - - - 623 623 422 1,045
Balance at
31 March 2018 284 171 679 99 6,972 8,205 208 8,413
Total
comprehensive
income for the
period - - - 869 869 (82) 787
Balance at 284 171 679 99 7,841 9,074 126 9,200
30 September
2018
Unaudited Group Statement of Cash flows
For the 6 months ended 30 September 2018
Unaudited Unaudited Audited
------------- ------------- ---------
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ------------- ---------
OPERATING ACTIVITIES
Profit/(loss) for the year
before taxation 972 1,047 1,517
Adjusted for: 228
Share based payment - - -
Shares in settlement of termination
payment - - 46
Depreciation 7 7 21
Investment impairment - 18 75
Gain on disposal of investment - - (4)
Operating cash flows before
movements in working capital 979 1,072 1,883
(Increase)/Decrease in trade
and other receivables (275) (247) (183)
Increase/(Decrease) in trade
and other payables (60) 22 (1)
Net cash from / (used in)
operating activities 644 (225) 1,699
Tax paid - (300)
Net cash used in operating
activities 644 847 1,399
------------------------------------- ------------- ------------- ---------
INVESTING ACTIVITIES
Purchase of property, plant
and equipment (8) (14) (19)
Development costs (94) (119) (359)
Purchase of investments - - -
Disposal of investments 24
Related party repayment of
loan - - (11)
Net cash from/(used in) investing
activities (102) (133) (365)
------------------------------------- ------------- ------------- ---------
FINANCING ACTIVITIES
Non-controlling interest
investment (149) 821 1,045
Dividend paid - - (568)
Net cash from/ (used in)
financing activities (149) 821 477
------------------------------------- ------------- ------------- ---------
Net (decrease)/increase in
cash and cash equivalents 393 1,535 1,511
Cash and cash equivalents
at beginning of the period 5,324 3,813 3,813
Cash and cash equivalents
at end of the period 5,717 5,348 5,324
------------------------------------- ------------- ------------- ---------
Notes to the interim statement
For the 6 months ended 30 September 2018
1. General information
Octagonal plc is a company incorporated in the England and Wales
with number 6214926, and whose registered office is: 2(nd) Floor, 2
London Wall Buildings, London EC2M 5PP, under the Companies Act
2006. The Company's main activity is that of a financial services
business offering a wide range of services to institutional, family
office and high net worth clients.
The Company's functional currency is Sterling. The Company's
financial statements are presented in Sterling, which is the
Company's presentational currency.
2. Basis of preparation
The financial information set out in this interim report for the
six months ended 30 September 2018 is unaudited and does not
constitute statutory accounts as defined in Section 434 of
Companies Act (2006).
The Company's statutory financial statements for the period
ended 31 March 2018, prepared under IFRS, have been filed with the
Registrar of Companies. The auditor's report on those financial
statements was unqualified and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
These financial statements have been prepared on a going concern
basis under the historical cost convention. The Directors believe
that the going concern basis is appropriate for the preparation of
these interim financial statements as the Company is in a position
to meet all its liabilities as they fall due. These interim
financial statements for the six months to 30 September 2018 were
approved by the Board on
8 November 2018.
3. Earnings per share
The basic earnings per share is based on the profit for the year
divided by the weighted average number of shares in issue during
the year. The weighted average number of ordinary shares for the
period ended year ended 30 September 2018 assumes that all shares
have been included in the computation based on the weighted average
number of days since issue.
Unaudited Unaudited Audited
------------- ------------- -------------
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'000
------------------------------- ------------- ------------- -------------
Profit attributable to owners
of the Group GBP869,000 GBP932,279 GBP1,276,000
------------------------------- ------------- ------------- -------------
Weighted average number
of ordinary shares in issue
for basic 564,706,598 560,893,552 564,706,598
------------------------------- ------------- ------------- -------------
Weighted average number
of ordinary shares in issue
for fully diluted earnings 578,453,598 - 578,453,598
------------------------------- ------------- ------------- -------------
Earnings per share (pence
per share)
Basic 0.153p 0.166p 0.226p
Fully diluted 0.150p - 0.221p
------------------------------- ------------- ------------- -------------
4. Dividend and post balance sheet events
On 28(th) September 2018, the Company declared a dividend of 0.1
pence per share and was paid on 26(th) October 2018.
On 8th October 2018, the Company announcd that it had awarded a
total of 1,350,000 Ordinary 0.05 pence shares in the company to
staff and employees that were in employment during the AIM
Re-admission in July 2015.
5. Distribution
The half yearly report for the six-month period ended 30
September 2018 will shortly be available on the Company's website
(www.octagonalplc.com) or directly from the Company at its
registered address.
-ends-
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END
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