K3 Capital profits dip as corporate finance division's revenue dives

K3 Capital stumbled on Monday after reporting that delays in transaction completions resulted in lower first-half pretax profit and revenue.

For the six months ended 30 November, profit before tax came in at £3.1m, down 5% on the same period last year, while first-half revenue dropped by 4% to £7.2m after several transactions in KBS Corporate Finance were shunted into the second half of the year, causing the division's revenue to drop by 41% to £1.7m.

Even so, the AIM traded company said in a statement that it expects full-year earnings to be in line with market expectations.

John Rigby, chief executive of K3, said: "Due to the expected timing of several transactions in KBS Corporate Finance moving from H1 into H2, and given our accounting policy of only recognising transaction fee income on completion, revenue in the Corporate Finance brand, for the reporting period, is £1.7m, down from £2.8m in H1 2018."

However, Rigby added that this, along with the ongoing delivery of organic growth, the KBS Corporate Finance brand ended the period with its highest ever value and volume of WIP pipeline.

At its other two trading subsidiaries, revenue from the Knightsbridge brand increased by 19% to £1.0m and KBS Corporate Sales brand revenue was up 17% at £4.6m.

At 30 November, K3 had cash and cash equivalents of £5.9m, up from £5m at the same point last year, while the board declared an interim dividend of 3.60 pence a share, up 26% on year.

"The improving performance across KPIs, ongoing investment in people and technology, coupled with the robust deal pipelines that exist across all three trading brands, lead us to a confident outlook for both the full year FY2019 and beyond," said Rigby.

K3 Capital's shares were down 10.43% at 246.33p at 1324 GMT.