Finlab's (DE:A7AGn) results combine relatively stable income from management fees and dividends received from the asset management subsidiaries, Heliad and Patriarch (total income at €1.76m vs €1.88m in H116), and sizeable revaluation gains (Kapilendo, Heliad) of €2.52m (vs -€0.3m in H116). The recent share issue and improved operating cash flow increased the company’s net cash position to €4.28m from €0.97m at end-2016. This puts FinLab in a strong position to execute further fintech investments. Following the recent positive share price performance, FinLab’s shares trade at an 18.9% premium to last reported NAV.
Bottom line assisted by write-ups
FinLab reported a pre-tax profit of €3.03m in H117, significantly above the H116 figure (€0.50m). This was largely due to positive revaluations on the company’s portfolio holdings (€2.52m compared to write-downs of €0.3m in H116), in particular Kapilendo and Heliad Equity Partners. A 33.8% y-o-y increase in income from investments to €0.67m and higher income from the sale of securities and financial assets (up 46.2% y-o-y to €0.73m in H117) also boosted profits. Diluted EPS came in at €0.63 vs €0.09 despite the higher average share count.
Recent capital increase fuels portfolio expansion
In May 2017, the company raised €5.85m issuing 450,000 new shares at a price of €13.00 per share. The proceeds will be used to make further investments in early-stage companies, as FinLab targets a portfolio of seven to 10 fintech investments. In addition to the four investments held at end-2016 (nextmarkets, Deposit Solutions, Kapilendo and Authada), the company recently entered into two, seven-figure euro investments in FastBill, a leading German SaaS tool for small business financial management, and Vaultoro, a real-time bitcoin gold exchange.
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