Finseta plc (LON:FIN), a foreign exchange and payments solutions company, today posted its unaudited interim results for the six months ended 30 June 2024 (H1 2024).

Revenue for the six months to 30 June 2024 increased by 40% to £5.1 million compared with £3.6 million for the first half of the previous year. On an underlying basis, to exclude revenue generated by white label partners in H1 2023, the Group’s revenue grew by 54% in H1 2024 over H1 2023.

This significant growth reflects an increase in active customers and in average transaction value, reflecting the Group’s expansion of its sales team and introducer network and an increased focus on providing an exceptional level of service to its clients.

Gross margin improved to 65.7% (H1 2023: 61.0%), which is primarily due to the Group no longer deriving revenue from white label partners following its strategic decision to manage down its historic white label business. The improvement in gross margin combined with the increased revenue resulted in substantial growth in gross profit to £3.3m (H1 2023: £2.2m).

Operating expenses were £2.8m in H1 2024 compared with £2.2m for the first half of the previous year. This primarily relates to additional sales team hires and increased performance-related bonuses commensurate with the Group’s performance; higher depreciation as a result of the Group’s move to a new leased corporate premises in the second half of 2023; and lower other operating income. Operating expenses as a proportion of revenue improved to 55% for the first half of 2024 (H1 2023: 62%).

Thanks to the strong operating performance, there was a substantial improvement in adjusted EBITDA to £831k compared with £190k for H1 2023. Adjusted EBITDA is stated after the add-back of other operating income, share-based compensation, profit from the disposal of a subsidiary and transaction costs, and the rental cost of the Group’s corporate premises.

The Group generated other operating income of £93k (H1 2023: £184k) based on interest on client cash balances (see note 3 to the financial statements). Profit from operations increased to £628k compared with £138k for H1 2023.

As a result of the increased profit from operations and reduced finance costs, profit before tax grew substantially to £569k in H1 2024 compared with £23k for the first half of the prior year.

The Group had a tax charge of £118k compared with a tax credit in the prior year period of £12k, principally reflecting the increased profitability of the Group. The tax charge was satisfied through the consumption of a deferred tax asset and, accordingly, was a non-cash expense.

Basic earnings per share increased to 0.79 pence (H1 2023: 0.06 pence), which was achieved despite an increase in the weighted average number of ordinary shares in issue to 57,417,101 (H1 2023: 55,791,324). On a fully diluted basis, earnings per share were 0.74 pence (H1 2023: 0.06 pence).

Cash generated from operating activities increased significantly to £782k (H1 2023: £114k) based on the improved trading performance. Cash used in investing activities was £204k (H1 2023: cash from investing activities of £85k), which primarily consists of the continued investment in developing the Group’s proprietary platform and a deferred consideration payment in respect of the February 2022 acquisition of Capital Currencies.

This was partly offset by the receipt of the proceeds from the disposal of Capital Currencies, a non-trading subsidiary with all of the customer and employment contracts acquired in February 2022 having previously been novated to the Group’s main trading entity, Finseta Payment Solutions Limited. Cash used in financing activities was £153k compared with £66k for H1 2023, with the difference primarily reflecting lease payments associated with the move to the new corporate premises.

As a result, as of 30 June 2024, cash and cash equivalents had increased to £2.8m (31 December 2023: £2.3m), resulting in net cash of £0.6m at 30 June 2024 (31 December 2023: £0.2m).

In terms of outlook, the company commented that the strong trading momentum of the first six months of the year has been maintained into the second half. Accordingly, the Group remains on track to report significant growth for full year 2024, in line with the Board’s expectations.