MARKET REPORT: FinnCap slides as misery mounts for stockbrokers

Finncap became the latest City broker to post tumbling revenues as it warned that the turmoil in financial markets was likely to persist into next year.

The company’s woes were laid bare as the chief executive John Farrugia, appointed in September, announced sweeping job cuts, a slashing of office space and no interim dividend for shareholders.

The harsh medicine was required after Finncap posted a 48 per cent fall in revenues to £16.4million in the six months to September compared with a year earlier.

Downturn: City broker FinnCap posted a 48% fall in revenues to £16.4m in the six months to September compared with a year earlier

The broker also swung to a loss of £2.6million having made a £6.3million profit 12 months ago.

In a sign of the sharp downturn, the City broker advised on just 11 private merger and acquisition deals worth around £430million compared to 13 deals valued at £1billion a year earlier.

It is the latest blow for investors who had hoped in October the firm would be taken over by Bob Diamond’s Panmure Gordon. 

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

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

Finncap was set up in 2007 by Sam Smith, the only woman to ever run one of London’s stockbrokers. 

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

Stock Watch – WANdisco

Investors in WANdisco cheered after the value of its contract with a client was bumped up for the second time this year.

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

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

Shares surged 8.3 per cent, or 53p, to 690p.

City stockbrokers have struggled ove the past year, hit by a lack of flotations, capital raisings and waning investor sentiment.

Finncap is no different. Fellow City broker Numis last week reported that its revenue slumped 33 per cent to £144.2million for the year to September while profit tumbled 72 per cent to £20.9million.

Finncap shares fell 6.9 per cent, or 1.03p, to 13.88p.

In better news, the FTSE 100 rose 0.8 per cent, or 56.92 points, to 7502.89 and the FTSE 250 gained 1.4 per cent, or 266.85 points, to 19086.29.

The price of Brent crude climbed 3.6 per cent to end the day above $80 a barrel, buoyed by hopes that China would relax its Covid measures. BP (up 1.9 per cent, or 8.95p, to 471.05p) and Shell (up 1 per cent, or 22.5p, to 2318p) both benefited.

But among the other household names Rolls-Royce sank 2.4 per cent, or 2.23p, to 90.61p after JP Morgan said the jet engine maker needs ‘near-term pain’ to achieve ‘long-term gain’.

The broker highlighted what it saw as a string of concerns, including Rolls-Royce’s weak balance sheet and profits.

Further down the league table and business was looking good for Capita, with the outsourcing giant on track to offload more of its non-core businesses in the first half of next year. 

The group has scooped up £462million in 2022 through the sale of businesses such as the payment services company Pay 360. 

In an update, the company said revenue was up 2 per cent for the 11 months to November. Shares soared 8.8 per cent, or 2.02p, to 25p.

Elsewhere, IHG shares added 0.5 per cent, or 25p, to 4986p after it appointed a finance boss.

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

Over at Chemring, shares rose 1.2 per cent, or 3.5p, to 305p after it brushed aside months of economic turmoil to end its financial year on a high.

Full-year results exceeded the defence group’s expectations, with revenue rising 13 per cent to £442.8million for the 12 months to October. Profit, meanwhile, increased 12 per cent to £62.5million.

The group also snapped up the data analytics company Geollect last week.

This post first appeared on Dailymail.co.uk