TIDMPEEL
RNS Number : 9886C
Peel Hunt Limited
16 June 2023
The following amendments have been made to the 'Full-Year
Results' announcement released on 16 June 2023 at 7:00 under RNS No
9193C.
-- In the Unaudited Illustrative Statement of Comprehensive
Income table, Dividend for Year ended 31 March 2023 should have
read 'Nil' and not '(1,322)'
All other details remain unchanged.
The full amended text is shown below.
Peel Hunt Limited
Full-Year Results
For the year ended 31 March 2023
Strategic progress in challenging markets
Peel Hunt Limited ("Peel Hunt" or the "Company") together with
its subsidiaries (the "Group") today announces audited results for
the year ended 31 March 2023 ("FY23").
The full-year results for the Group consolidate Peel Hunt
LLP, a limited liability partnership which, up until the IPO
of the Company on 29 September 2021, had a corporate member
and individual members. Profits derived from the partnership
during the year ended 31 March 2022 ('FY22') were allocated
between the members. Profits attributable to the corporate
member were retained within the Group and subject to corporation
tax; profits attributable to individual members (prior to
the IPO) comprised the non-controlling interests, with those
members bearing tax liabilities personally. Following the
IPO, individual members became employees of Peel Hunt LLP
with all future earnings attributable to the Group.
For reference, an unaudited illustrative consolidated statement
of comprehensive income for FY22 is also presented as a prior
year comparative. This statement illustrates the impact that
the reorganisation of the Group's corporate structure, and
the IPO, would have had on the consolidated statement of comprehensive
income had it taken place on or before 31 March 2021. This
illustrative statement retains the actual revenue results
in FY22 and considers the addition of all former members of
Peel Hunt LLP being remunerated as employees along with related
National Insurance contributions and pension costs on an ongoing
basis. The statement has also been adjusted to remove the
impact of one-off costs relating to the IPO, and tax-related
prior year items arising in FY22. Partnership profits that
were allocated to the former individual members in FY22, or
non-controlling interests, are attributed to the Group in
full and are shown as if subject to corporation tax.
Steven Fine, Chief Executive Officer, said:
"The challenges faced by the financial services sector in the
past 12 months have been well documented, with the impact on market
activity and investor sentiment felt across the industry. This can
be seen in our FY23 results.
Despite this backdrop, we have continued to deliver on the
strategic priorities of the organisation, adding FTSE 350 mandates,
building-out our Private Capital Markets capability and
strengthening our M&A/Advisory business. We are also pleased to
be relaunching REX as RetailBook alongside a number of our peers,
and to have received regulatory approval for our EU platform.
Real credit for all of this goes to our people, who have shown
incredible tenacity, working together to stay focused on what
matters most: looking after our clients. I'd like to thank them for
their hard work and continued enthusiasm for our future.
Our distinctive culture and continued technology leadership have
been integral to navigating this turbulence and will remain core to
the long-term future of the firm. Our diversified business model
and cost discipline have helped us maintain a strong balance sheet,
which in turn has allowed us to invest selectively to strengthen
our platform. We remain confident that we will be ready and
well-positioned to capitalise when market activity normalises."
Highlights
-- Revenue and profitability impacted by unusually low capital
markets activity throughout FY23
o Revenue of GBP82.3m (FY22: GBP131.0m) and loss before tax
(LBT) of GBP(1.5)m (FY22: profit before tax (PBT) GBP41.2m)
o Actions taken to rationalise costs, partially mitigating
inflationary cost pressures
-- Business division performance
o Investment Banking revenues were GBP23.4m (FY22: GBP57.9m), 19
new retained corporate clients, including seven in the FTSE 350. We
currently act for 40 FTSE 350 clients, an increase of 37.9% over
the last five years
o Execution Services revenues remain higher than pre-pandemic
levels at GBP33.8m but down year-on-year due to lower market
volumes (FY22: GBP46.1m). Market leading position retained with a
13.3% share of LSE volumes
o A resilient performance in Research and Distribution with
revenues of GBP25.1m (FY22: GBP26.9m) despite the drop in market
activity. Further strengthened our market leading mid-cap North
American and Continental European distribution capabilities, and
continued to build our institutional client base
-- Strategic progress
o Further built out our Private Capital Markets capability and
strengthened our M&A/Advisory business
o Our retail capital markets technology platform REX to relaunch
as RetailBook, a standalone business that will operate
independently of Peel Hunt. Collaboration agreements in place with
Hargreaves Lansdown, Jefferies, Numis and Rothschild & Co
o Regulatory approval received for Peel Hunt Europe to open our
Copenhagen office which is expected to be operational over the
summer
-- Our strong balance sheet allowed us to take advantage of
market dislocation to make selective and targeted investment in
talent in line with the strategy
o Net assets of GBP93.1m and cash balances of GBP27.4m
o Capital base comfortably in excess of minimum regulatory
requirements
-- Well positioned for when market conditions improve with c
onsiderable operational leverage in the business
Outlook
Whilst the macro-economic backdrop may remain challenging for
some time, we have seen a gradual improvement in our M&A
pipeline since the start of FY24, with UK mid-cap valuations
remaining attractive, and are seeing tentative signs of a pick-up
in capital markets activity. We will continue to progress our
strategic priorities whilst prudently managing the business through
this period of downturn. As consolidation amongst UK-focused
investment banking and financial advisory businesses accelerates,
we remain confident that our consistent model of delivering a
joined-up and agile service, providing our clients with trusted and
impartial advice, will position us well to take advantage of
opportunities that may arise.
Key statistics
Financial highlights 2023 2022 Change
-------------------------------- ------------- ------------ --------
Revenue GBP82.3m GBP131.0m (37.2)%
-------------------------------- ------------- ------------ --------
(Loss)/Profit before tax
(1) LBT GBP(1.5)m PBT GBP41.2m (103.6)%
-------------------------------- ------------- ------------ --------
Basic EPS (2) (1.1)p 15.4p (107.1)%
-------------------------------- ------------- ------------ --------
Dividend - 3.1p (100)%
-------------------------------- ------------- ------------ --------
Compensation ratio (3) 58.6% 47.1% 11.5ppts
-------------------------------- ------------- ------------ --------
Operating highlights
-------------------------------- ------------- ------------ --------
Cash GBP27.4m GBP76.7m (64.3)%
-------------------------------- ------------- ------------ --------
Net assets GBP93.1m GBP100.1m (7.0)%
-------------------------------- ------------- ------------ --------
Corporate clients 155 162 (4.3)%
-------------------------------- ------------- ------------ --------
Average market cap of clients GBP690.5m GBP 683.7m 1.0%
-------------------------------- ------------- ------------ --------
Notes:
(1) Illustrative PBT in FY22 was GBP33.1m
(2) Illustrative Basic EPS in FY22 was GBP21.1p
(3) Illustrative Compensation ratio (using illustrative staff
costs) in FY22 was 46.3%.
For further information, please contact:
Peel Hunt : via MHP
Steven Fine, CEO
Sunil Dhall, CFOO
MHP (Financial PR): +44 (0)20 3128 8540
Tim Rowntree
Charlie Barker
Robert Collett-Creedy
peelhunt@mhpgroup.com
Grant Thornton UK LLP (Nominated Adviser) : +44 (0)20 7728
2942
Colin Aaronson
Samuel Littler
Keefe, Bruyette & Woods (Corporate Broker) : +44 (0) 20 7710
7600
Alistair McKay
Alberto Moreno Blasco
Fred Walsh
Akshman Ori
Notes to editors
Peel Hunt is a leading specialist in UK investment banking. Our
purpose is to guide and nurture people through the evolution of
business. We achieve this through a proven, joined-up approach that
consistently delivers value to UK corporates, global institutions
and trading counterparties alike.
Forward-looking statements
This announcement contains forward-looking statements.
Forward-looking statements sometimes use words such as 'may',
'will', 'could', 'seek', 'continue', 'aim', 'anticipate', 'target',
'project', 'expect', 'estimate', 'intend', 'plan', 'goal',
'believe', 'achieve' or other words of similar meaning. Past
performance is no guide to future performance and any
forward-looking statements and forecasts are based on current
expectations and assumptions but relate to events and depend upon
circumstances in the future and you should not place reliance on
them. These statements and forecasts are subject to various risks
and uncertainties and there are a number of factors that could
cause actual results or developments to differ materially from
those expressed or implied by forward-looking statements and
forecasts.
The forward-looking statements contained in this document speak
only as of the date of this announcement and (except as required by
applicable regulations or by law) Peel Hunt does not undertake to
publicly update or review any forward-looking statements, whether
as a result of new information, future events or otherwise.
Nothing in this announcement constitutes or should be construed
as constituting a profit forecast.
No offer of securities
The information, statements and opinions contained in this
announcement do not constitute or form part of, and should not be
construed as, any public offer under any applicable legislation, or
an offer, or solicitation of an offer, to buy or sell any
securities or financial instruments in any jurisdiction, or any
advice or recommendation with respect to any securities or
financial instruments.
BUSINESS REVIEW
Market review
During FY23 we have seen an extraordinary level of market
turmoil, driven by different economic and geopolitical events. The
ongoing war on European soil combined with the fallout from the UK
Government's disastrous mini-budget have contributed to rapidly
rising interest rates, which are now at their highest level for 14
years. This, together with the biggest bank failures since 2008,
has weighed heavily on investor confidence and market volumes in
the UK.
Overall, during the financial year, the FTSE 250 declined 10.6%
and the AIM All-Share 22.3%, although both have staged recoveries
in the second half, from October lows. Nevertheless, capital
markets activity levels have remained exceptionally low throughout
the period and the IPO market has been effectively closed.
Divisional review: Investment Banking
This has been a difficult year for the UK's equity markets, with
very low volumes of activity, particularly around primary issuance.
As a result, Investment Banking revenues in FY23 were down at
GBP23.4m, compared with GBP57.9m in FY22. Overall, we acted on 27
Equity Capital Markets (ECM) transactions over FY23, versus 46 in
FY22. Nonetheless, we worked on a number of successful secondary
fundraising transactions with a total value of GBP829.6m, acted on
a number of high-profile public M&A transactions, and continued
to develop our retail capital markets profile on our own
transactions as well as on third-party transactions, through the
use of REX.
We have always stayed close to our clients and invested
selectively in our business during economic downturns. This year
has been no different. The quality and consistency of our team and
the services they provide, alongside our absolute commitment to
being a trusted adviser to our clients, have helped us win 19 new
retained corporate clients.
A key element of our refined strategy is to evolve the quality
and profitability of our corporate client base, focusing on mid-cap
and growth companies ahead of absolute client numbers. In the
period we added seven FTSE 350 clients. Notwithstanding the drop in
the FTSE 250 over FY23, the average market capitalisation of our
retained corporate clients was GBP690.5m (FY22: GBP684m). Overall,
we ended the year with 155 corporate clients (FY22: 162), including
39 in the FTSE 350, and our income from retainers increased to
GBP8.8m. What sits behind these numbers is the quality and
relevance of the relationships we're developing, and our long-term
approach of supporting our clients through the evolution of
business.
Towards the end of Q4, we saw some pick-up in market activity,
with a number of new mandates and pipeline deals with a higher
M&A weighting. However, it is too early to say what will happen
in practice, and execution risk remains amplified.
A period of sustained subdued capital market activity has given
us the opportunity to spend time focusing internally on building
the business in line with our strategic priorities. Expanding
Investment Banking as part of the joined-up service we offer
clients includes strengthening our capabilities in M&A, Private
Capital Markets, and Debt Advisory. We are really pleased to have
made some key strategic hires in these areas. A particularly
important development is our increasing focus on Private Capital
Markets. We've long been known for our expertise in Equity Capital
Markets, but our services are equally relevant to private
companies.
We're also investing in people at the very start of their
finance career, launching our first graduate scheme, which has
given us the opportunity to target a more diverse pool of
candidates. The scheme has already proved popular, with more than
1,000 applications for four places. Our graduates will join us
later in 2023 and will spend their first 12 months rotating through
a series of roles to help them experience our joined-up
approach.
Technology is one of our firm-wide strategic priorities, and
it's particularly relevant in Investment Banking, where our ability
to digitalise makes life easier, simpler, faster and more efficient
for our clients and ourselves. Our proprietary retail platform,
REX, is an excellent example of this. This year, REX was mandated
on 12 completed transactions of which eight were non-Peel Hunt
deals. We're now taking steps to spin off REX into a standalone
business, RetailBook, which will help expand retail participation
in capital markets.
Meanwhile, our ability to use technology to interrogate data in
a more meaningful way is evolving. The bespoke digital tools and
dashboards developed by our in-house team are adding value to our
Investment Banking service, helping us share emerging trends and
themes with clients more quickly, and speeding up decision-making.
What's also important is how we're embedding digital thinking
within our team. Not everyone needs to be able to create
technology, but we all need to understand what technology can help
us achieve and how it can add value to our clients.
Divisional review: Execution Services
Execution Services had a respectable year despite the extremely
challenging economic climate, generating revenue of GBP33.8m (FY22:
GBP46.1m). Crucially, we retained a leading market position with a
13.3% share of LSE volume, ahead of our pre-pandemic market
share.
Systematic Trading and Investment Trusts performed in-line with
expectations. Fixed Income has outperformed given the greater
trading opportunities in fixed income securities this year. The
capital and funding we've applied to the trading business has
yielded positive returns in difficult markets.
We have not completely avoided the market turbulence, with lower
trading volumes, particularly in small-cap and AIM stocks, but the
revenue we have generated has contributed to the resilience of the
firm overall. This is thanks, in large part, to the experience that
we have built up in our team over several years, and our proactive
approach to diversifying our revenue across a growing number of
trading strategies. From this, we can access incremental,
differentiated pools of liquidity for our clients and
counterparties.
As a result, we've been able to keep demonstrating our ability
to deliver positive returns from low-risk market making across the
cycle. Despite market volatility during the period, our traders
have maintained good risk management discipline, operating within
their risk limits.
Technology is an essential part of our trading capabilities and
risk controls. Thanks to the investments we've made over more than
a decade, our proprietary tools and platforms have helped us retain
a high market share of retail trading and continue building our
overall UK trading volumes. Today, technology is genuinely a
differentiator for our business. But ours is also an increasingly
competitive space, so we have continued to invest in our
proprietary trading intelligence tool, Peel Hunt Automated Trading
(PHAT), to make it more efficient and ensure we continue to provide
fast access to liquidity for our customers and clients. We're
always innovating and giving our traders better tools to manage
risk and trade efficiently.
Divisional review: Research & Distribution
Research & Distribution has had another stable, resilient
year, despite the challenges in the macroeconomic landscape.
Revenue from research payments and execution commissions was down
6.9% to GBP25.1m (FY22: GBP27.0m), reflecting the quality of our
research offering, broad and deep institutional relationships, and
aligned core trading focused on driving liquidity and facilitating
client business in difficult markets.
Although market volumes fell, we saw momentum in new account
openings in both formal research agreements and trading accounts.
We also continued to expand our offering to a wider universe of
hedge funds, sovereign wealth funds, overseas funds and family
offices and private capital market investors. As well as opening up
new commission opportunities, this has further strengthened our ECM
distribution platform.
Today, we have 1,243 relationships with clients who value our
top-rated research, an increase from 1,235 in FY22. Annual sales
interactions this year reached 17,340 (FY22: 16,372).
The experience and consistency of our research, distribution and
core trading teams has always helped us win new corporate clients
and IPO mandates, and these qualities became even more important
this year as we stepped forward to help our clients navigate
challenging markets.
As well as retaining our number one research ranking in the
Institutional Investor's UK Mid and Small-cap survey for the sixth
consecutive year, a record five of our analysts ranked individually
in the top 10 across all sectors. Meanwhile, our US and Continental
European sales teams were also ranked number one for the second
year running.
One of our strategic priorities is to expand our distribution
footprint in the UK and internationally. This will ensure our
corporate clients have in-depth access to all relevant pools of
capital as we become an increasingly key partner for new
institutional clients. We have now received regulatory approval for
our new Copenhagen office, which will allow us to reinstate our
unrestricted, pre-Brexit access to EU institutions.
Meanwhile, our differentiated, low-touch institutional
electronic execution product, developed in conjunction with our
technology team, continues to build momentum. Having completed the
build out, we are now onboarding clients. Our low-touch product is
an increasingly important part of delivering best execution for our
clients.
Technology has also been a big theme for our research team, as
we completed work to roll out our new centralised Research
database. It's already helping us be more efficient, giving our
research analysts new tools to interrogate data and produce more
in-depth reports. We're very much at the start of this process,
exploring the tremendous potential the database has to generate
deeper insights, more quickly, to share with our clients. We also
continued to develop our new portal for investors.
However, perhaps the most exciting development for our digital
approach this year was having a specialist developer embed
themselves in the research team. As a result, we have already
introduced some bespoke, data-led products and are quickly
harnessing the power of artificial intelligence to help our
research and sales teams produce superior content for our clients.
This connection between frontline work across the firm will help
ensure that our accelerating technology investments keep our
clients' needs front and centre, bolstering our role as a trusted
adviser.
Current trading and outlook
The challenging market conditions seen throughout FY23 have
continued into FY24, although we have seen a gradual improvement in
our pipeline since the start of FY24, especially in M&A, and
there are tentative signs of a pick-up in capital markets activity.
Through the remainder of this period of downturn, we will continue
to prudently manage the business, make strategic progress and
position the business for when market activity normalises. The
stability of our platform, our one-firm, joined-up approach and
consistent impartial advice, mean that we are well positioned to
take advantage of opportunities with our clients as market
conditions improve.
FINANCIAL REVIEW
Revenue performance
Our revenue performance was in line with revised market
expectations, albeit down relative to the prior year, influenced by
uncertainty in the global markets, high inflation and rising
interest rates. Nevertheless, our strategy of combining advice,
research, distribution and market share in trading volumes, allied
to our sector specialist approach, remains in demand and will put
us in a good position as market conditions normalise.
Continued targeted investment in our operating divisions, both
in technology and our people, remains important to the long-term
growth of the business.
Revenue comprises the following:
FY23 FY22 %
GBP000 GBP000 change
Investment Banking revenue 23,411 57,948 (59.6)%
------- -------- --------
Research payments and execution
commission(1) 25,116 26,986 (6.9)%
------- -------- --------
Execution Services revenue(1) 33,810 46,112 (26.7)%
------- -------- --------
Total revenue for the year 82,337 131,046 (37.2)%
------- -------- --------
Notes:
(1) We have reclassified GBP3.5m from Research payments and
Execution commission to Execution services revenue to better match
how the business is managed. The effect of the reclassification is
immaterial in the current year.
Revenue for the year was GBP82.3m (FY22: GBP131.0m). Investment
Banking revenue was affected by the uncertain global economic
environment and extreme lows in capital markets activity throughout
FY23. Execution Services revenue remained higher than pre-pandemic
levels, although down year-on-year due to lower market volumes.
Research & Distribution revenue remained resilient, with
research payments and institutional commissions largely consistent
with the previous year, notwithstanding the drop in market
activity.
Investment Banking performance
FY23 FY22 %
GBP000 GBP000 change
Investment Banking fees 14,622 49,643 (70.5)%
-------- ------- --------
Investment Banking retainers 8,789 8,305 5.8%
-------- ------- --------
Total Investment Banking revenue 23,411 57,948 (59.6)%
-------- ------- --------
This year has been a challenging period for UK equity capital
markets with transaction activity at an all-time low, particularly
in terms of primary equity issuance. The downturn has suppressed
client activity and stalled IPO mandates. As a result, our revenue
for the year was down to GBP23.4m, compared with GBP57.9m in
FY22.
During the year we added 19 new retained corporate clients
(including seven in the FTSE 350). At the end of FY23 we had 155
corporate clients (FY22: 162), with an average market
capitalisation of approximately GBP690.5m, including 39 in the FTSE
350. Having added a further FTSE 350 client since the start of
FY24, we now act for 40 FTSE 350 clients.
We have continued to strengthen our private capital markets
capabilities, enabling us to act for both public and private
companies alike. We have also continued to invest in our advisory
business, where we act as retained financial adviser on M&A
transactions.
We continue to receive new mandate enquiries and we have a
number of pipeline deals that we expect to execute when market
conditions permit.
Execution Services performance
FY23 FY22 %
GBP000 GBP000 change
Execution Services revenue 33,810 46,112 (26.7)%
-------- ------- --------
Execution Services revenue was down 26.7% to GBP33.8m, although
our volumes and LSE market share remained above pre-pandemic
levels.
Our Execution Services revenue is diversified across a growing
number of trading strategies as we obtain access to incremental,
differentiated pools of liquidity, extending our ability to provide
liquidity to our clients and counterparties. We continued to
demonstrate our ability to deliver positive returns from low-risk
market making across the cycle, and our traders have maintained
good risk management discipline, operating well within their risk
limits.
During the financial year the FTSE 250 and AIM All-Share
declined 10.6% and 22.3% respectively, and trading volumes remained
much lower across the market as a whole. Despite this backdrop, a
number of our trading books have performed well versus market
drawdowns.
Research & Distribution performance
FY23 FY22 %
GBP000 GBP000 change
Research payments and execution
commission 25,116 26,986 (6.9)%
-------- ------- --------
Research & Distribution returned a resilient revenue
performance of GBP25.1m, representing a 6.9% reduction, compared to
FY22. The effect of reduced market volumes was somewhat offset by
momentum in new account openings, across both formal research
agreements and trading accounts. We expanded our offering to a
wider universe of hedge funds, sovereign wealth funds, overseas
funds and family offices, which have opened up new commission
opportunities.
Our differentiated, low-touch institutional electronic execution
product continues to build momentum, with the technical build-out
now complete and client onboarding ongoing.
Costs and people
FY23 FY22 %
GBP000 GBP000 change
Illustrative staff costs(1) 48,252 60,680 (20.5)%
-------- ------- ---------
Illustrative non-staff costs(1) 34,125 35,665 (4.3)%
-------- ------- ---------
Total illustrative administration
costs(1) 82,377 96,345 (14.5)%
-------- ------- ---------
Illustrative compensation ratio(1) 58.6% 46.3% 12.3ppts
-------- ------- ---------
Actual staff costs(2) 48,252 41,465 16.4%
-------- ------- ---------
Actual non-staff costs 34,125 36,852 (7.4)%
-------- ------- ---------
Total actual administration costs 82,377 78,317 5.2%
-------- ------- ---------
Actual compensation ratio 58.6% 47.1% 11.5ppts
-------- ------- ---------
Period-end headcount 310 309 0.0%
-------- ------- ---------
Average headcount 316 299 5.7%
-------- ------- ---------
Notes:
(1) FY23 are actual financial results; FY22 are illustrative
financial results as outlined in the Unaudited Illustrative
Statement of Comprehensive Income below.
(2) Actual staff costs in FY22 include variable remuneration
costs for employees but not for members
Despite the challenging markets, we are confident in our
strategy, and have continued with our programme of targeted
investment in our strategic priorities.
Actual staff costs in FY23 were higher than FY22, partly due to
the increase in headcount, and partly due to the change in
compensation structure between the periods. In H1 FY22, all former
members of Peel Hunt LLP were remunerated as employees, with
additional National Insurance contributions and pension costs.
Also, at the start of FY22, the firm rebalanced the compensation of
staff between fixed and variable pay. This brought fixed
compensation in line with peer firms in an extremely competitive
market for talent and also prepared us to meet the Investment Firm
Prudential Regulation ('IFPR') remuneration requirements. IFPR
requires that a proportion of variable compensation for certain
staff members must now be paid in shares and deferred over multiple
years.
Illustrative staff costs (including variable remuneration) in
FY23 were lower than FY22, reflecting the reduction in revenue and
the associated reduction in variable remuneration expense. However,
reduced revenue has resulted in an increased illustrative
compensation ratio compared with FY22.
Actual non-staff costs decreased in FY23 largely due to the
corresponding period in FY22 including the costs associated with
the IPO. However, FY23 additional costs related to increased audit
and corporate governance requirements alongside increased interest
rates and inflationary increases, particularly on our large
technology contracts and our continued investment in technology
capabilities. Illustrative non-staff costs are largely consistent
with FY22.
Since the end of FY23, we have taken action to rationalise costs
and we will continue to carefully monitor expenditure in the
context of prevailing market activity/conditions, whilst remaining
focused on our strategic priorities.
Responsible business
Our commitments to diversity and sustainability are shaped by
our board-level ESG Committee. During the period, we have
determined four areas of focus which are important to our
stakeholders and which Peel Hunt can positively impact. These
are:
i. Diversity, equity and inclusion
ii. Carbon reduction
iii. Governance and integrity: We are working to ensure that
sustainability is formally embedded within our risk appetite and
decision-making processes
iv. Building our sustainability capabilities and products: We
want to help our investment bankers and research analysts enhance
their sustainability knowledge so that they can better serve our
clients.
In the spirit of creating measurable steps for delivery, we have
set important targets to reduce our carbon footprint and increase
gender diversity. These include a target of women comprising at
least 40% of employees by 2035, as well as setting targets to
become carbon neutral by 2025, and reach net zero by 2040.
Balance sheet
The Group's net asset position as at 31 March 2023 was GBP93.1m
(31 March 2022: GBP100.1m), representing a decrease of 7.0% from
compared with last year, due to the previous year's dividend
payment, the EBT's acquisition of ordinary shares in the Group to
meet future employee share plan obligations and the loss in the
current financial year.
We have a strong balance sheet following the IPO, and as at 31
March 2023 we maintained GBP101.7m of liquid assets, comprising
cash and settled securities (mainly equities and some government
bonds), which can provide funding to the business at short
notice.
Capital and liquidity
The business maintained a good cash balance at the year-end of
GBP27.4m, having decreased from GBP76.7m as at 31 March 2022. This
is largely due to the settlement of amounts attributable to the
period before the IPO, in addition to investment in the trading
book and payment of the dividend in July 2022. We have now
completed all non-recurring payments due in relation to the period
before the IPO.
Strong liquidity management and controls have remained a focus
during the year, to ensure the resilience of our business. Scenario
and stress testing have always been part of our regular liquidity
and capital analysis, providing clear actions that can be
implemented in severe scenarios.
We continue to operate well in excess of our minimum regulatory
capital requirements with an Own Funds cover over net assets of
555% at the end of FY23, compared to 558% at the end of FY22. The
slight decrease has been due to the reduction in net assets since
FY22 offset by a reduction in risk exposures during FY23.
We repaid long-term debt of GBP6.0m during the year leaving
GBP21.0m of principal outstanding as at 31 March 2023, and we
continue to have access to a GBP30.0m revolving credit facility
('RCF'), which was renewed during the year. Since the year end we
have accelerated repayments of GBP6m further reducing the principal
outstanding to GBP15m as shown in Note 9 to the condensed
consolidated financial statements.
Dividend
The Board is not proposing a dividend for the year.
Unaudited Illustrative Statement of Comprehensive Income
The unaudited illustrative statement of comprehensive income,
set out below, has been prepared for the comparative period to
illustrate the impact that the reorganisation of the Group's
corporate structure, and the IPO, would have had on the
consolidated statement of comprehensive income had it taken place
on or before 31 March 2021. FY23 are actual results whilst FY22 is
prepared on an illustrative basis.
Year ended Year ended
31 March 2023 31 March
2022
Continuing activities Notes GBP'000 GBP'000
------------------------------- ------ -------------- -----------
Revenue 82,337 131,046
Administrative expenses (1) (82,377) (96,345)
(Loss)/profit from operations (40) 34,701
Finance income 692 15
Finance expenses (2,320) (1,664)
Other income 180 56
(Loss)/profit before tax (1,488) 33,108
Tax (2) 166 (7,566)
(Loss)/profit after tax (1,322) 25,542
Dividend (3) - (10,217)
Retained (loss)/profit
for the period (1,322) 15,325
Illustrative performance
metrics
------------------------------- ------ -------------- -----------
Compensation ratio 58.6% 46.3%
Non-staff cost ratio 43.2% 28.4%
(Loss)/profit before tax
margin (1.8)% 25.3%
Notes to the Unaudited Illustrative Statement of Comprehensive
Income
1. Administrative expenses - in FY22 these include the impact of
changes to the compensation structure of the Group, including the
former members of Peel Hunt LLP being remunerated as employees plus
the resulting additional National Insurance contributions and
pension costs. In addition, FY22 excludes one-off costs of GBP4.1m
(GBP1.2m of staff costs relating to the reorganisation of the
Group's corporate structure, and GBP2.9m of non-staff costs
relating to the IPO).
2. Tax - the corporation tax in FY22 includes the effect of the
Group being subject to corporation tax at the standard rate (19%)
on additional profits.
3. Dividend - the dividend in FY22 includes the targeted basic
dividend pay-out ratio of the Group (40%), applied to the profit
after tax for the period.
Reconciliation of Illustrative to Actual Consolidated
Comprehensive Income for FY22 (1)
The impact of Notes (1) to (3) in the unaudited illustrative
statement of comprehensive income on FY22 is summarised below:
Administrative
expenses (2)
Actual Include: Exclude: Exclude: Include: Include: Illustrative
financials revised one-off one-off additional illustrative financials
- FY22 compensation expenses tax charge corporation 40% dividend - FY22
model (3) in respect tax
of prior
years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit before
tax for the
period 41,228 (12,193) 4,073 33,108
---------------- ------------ -------------- ---------- ------------ ------------- -------------- -------------
Tax (5,280) 1,559 (3,845) (7,566)
Profit after
tax 35,948 (12,193) 4,073 1,559 (3,845) 25,542
---------------- ------------ -------------- ---------- ------------ ------------- -------------- -------------
Dividend (10,217) (10,217)
Retained profit
for the period 15,325
---------------- ------------ -------------- ---------- ------------ ------------- -------------- -------------
(1) There is no reconciliation for FY23 as the results remain
the same as the actual financial results.
(2) Administration expenses includes members' remuneration
charged as an expense; this is presented separately from the actual
administration expenses shown in the consolidated statement of
comprehensive income within the financial statements.
(3) Includes National Insurance, pension costs and variable
remuneration related to former members of Peel Hunt LLP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
Audited for the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Continuing activities Note GBP'000 GBP'000
-------------------------------- ----- ----------- -----------
Revenue 2 82,337 131,046
Administrative expenses 3 (82,377) (78,317)
(Loss)/profit from operations (40) 52,729
Finance income 4 692 15
Finance expense 4 (2,320) (1,664)
Other income 180 56
-------------------------------- -----
(Loss)/profit before members'
remuneration and tax (1,488) 51,136
Members' remuneration charged
as an expense 3 - (9,908)
(Loss)/profit before tax for
the year (1,488) 41,228
Tax 5 166 (5,280)
(Loss)/profit for the year (1,322) 35,948
Other comprehensive income for
the year - 27
Total comprehensive (expense)
income for the year (1,322) 35,975
-------------------------------- ----- ----------- -----------
Attributable to:
Owners of the Company (1,322) 10,954
Non-controlling interests 6 - 24,994
-------------------------------- ----- ----------- -----------
(Loss)/profit for the year (1,322) 35,948
-------------------------------- ----- ----------- -----------
Attributable to:
Owners of the Company (1,322) 10,981
Non-controlling interests 6 - 24,994
-------------------------------- ----- ----------- -----------
Total comprehensive (expense)
income for the year (1,322) 35,975
-------------------------------- ----- ----------- -----------
(Loss)/earnings per share - attributable
to owners of the Company:
Basic 8 (1.1p) 15.4p
Diluted 8 (1.1p) 15.4p
Consolidated Statement of Financial Position
Audited as at 31 March 2023
As at 31 March As at 31 March
2023 2022
GBP'000 GBP'000
------------------------------- --------------- ---------------
ASSETS
Non-current assets
Property, plant and equipment 8,092 9,341
Intangible assets 1,152 110
Right-of-use assets 15,889 18,219
Deferred tax asset 273 259
Total non-current assets 25,406 27,929
-------------------------------- --------------- ---------------
Current assets
Securities held for trading 54,144 50,341
Market and client debtors 471,504 559,485
Trade and other debtors 15,546 13,200
Cash and cash equivalents 27,410 76,719
-------------------------------- --------------- ---------------
Total current assets 568,604 699,745
-------------------------------- --------------- ---------------
LIABILITIES
Current liabilities
Securities held for trading (32,062) (32,705)
Market and client creditors (421,953) (505,475)
Amounts due to members - (21,837)
Trade and other creditors (4,214) (16,790)
Long-term loan (6,000) (6,000)
Lease liabilities (2,867) (2,544)
Provisions (576) (540)
-------------------------------- --------------- ---------------
Total current liabilities (467,672) (585,891)
-------------------------------- --------------- ---------------
Net current assets 100,932 113,854
-------------------------------- --------------- ---------------
Non-current liabilities
Long-term loan (15,000) (21,000)
Lease liabilities (18,192) (20,649)
Total non-current liabilities (33,192) (41,649)
-------------------------------- --------------- ---------------
Net assets 93,146 100,134
-------------------------------- --------------- ---------------
Consolidated Statement of Financial Position
Audited as at 31 March 2023
As at 31 March As at 31 March
2023 2022
GBP'000 GBP'000
------------------------ --------------- ---------------
EQUITY
Ordinary share capital 40,099 40,099
Other reserves 53,047 60,035
Total equity 93,146 100,134
------------------------- --------------- ---------------
Consolidated Statement of Changes in Equity
Audited for the year ended 31 March 2023
Ordinary Other Total Equity
share Own shares reserves
capital held by
the
Company
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- ------------- -------------------- -------------------
Balance at 1 April
2021 99 (14) 48,285 48,370
Profit for the year - - 10,954 10,954
Other comprehensive
income - - 27 27
Total comprehensive
income - - 10,981 10,981
Transactions with
owners
New shares issued
during the year 40,000 - (2,513) 37,487
(including cost of
issuance)
Gain on option exercise - - 730 730
Sale of Company shares - 14 2,552 2,566
Balance at 31 March
2022 40,099 - 60,035 100,134
----------------------------- --------- ------------- -------------------- -------------------
Loss for the year - - (1,322) (1,322)
Other comprehensive - - - -
income
Total comprehensive
expense - - (1,322) (1,322)
Transactions with
owners
Equity-settled share-based
payments reserve - - 647 647
Purchase of Company
shares - - (2,581) (2,581)
Dividends paid - - (3,732) (3,732)
----------------------------- --------- ------------- -------------------- -------------------
Balance at 31 March
2023 40,099 - 53,047 93,146
----------------------------- --------- ------------- -------------------- -------------------
Consolidated Statement of Cash Flows
Audited for the year ended 31 March 2023
Year ended Year ended
31 March 2023 31 March 2022
Note GBP'000 GBP'000
--------------------------------------- ----- --------------- ---------------
Net cash used in operations 9 (30,899) (68,074)
--------------------------------------- ----- --------------- ---------------
Cash flows from investing activities
Purchase of tangible assets (511) (1,346)
Purchase of intangible assets (1,087) (6)
Disposal of equity investments
not held for trading - 47
Net cash used in investing activities (1,598) (1,305)
--------------------------------------- ----- --------------- ---------------
Cash flows from financing activities
Interest paid (1,382) (732)
Dividends paid (3,732) -
Lease liability payments (3,117) (316)
Proceeds from share issuance - 40,000
(Purchase)/sale of Company shares (2,581) 2,566
Proceeds from option exercise - 730
Share issuance expenses - (2,513)
(Repayment of)/increase in long-term
loan (6,000) 3,000
Net cash (used in)/ generated
from financing activities (16,812) 42,735
--------------------------------------- ----- --------------- ---------------
Net decrease in cash and cash
equivalents (49,309) (26,644)
Cash and cash equivalents at start
of period 76,719 103,363
--------------------------------------- ----- --------------- ---------------
Cash and cash equivalents at
end of period 27,410 76,719
--------------------------------------- ----- --------------- ---------------
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Peel Hunt Limited (the Company) (until 21 September 2021, PH
Capital Limited) is a non-cellular company limited by shares having
listed its shares for trading on the Alternative Investment Market
(AIM), a market operated by The London Stock Exchange, on 29
September 2021. The Company is registered in Guernsey. Its
registered office is Ground Floor, Dorey Court, Admiral Park, St
Peter Port, Guernsey GY1 2HT. The consolidated financial statements
of the Company comprises the Company and its subsidiaries, together
referred to as the Group.
The financial information is presented in pounds sterling and
all values are rounded to the nearest thousand (GBP'000), except
where indicated otherwise.
The financial information has been prepared on the historical
cost basis, except for derivatives, financial assets and
liabilities which are valued at fair value through profit and loss
(FVTPL) and fair value through other comprehensive income (FVTOCI).
Historical cost is generally based on the fair value of the
consideration given in exchange for the assets.
Going concern
The Group's principal activities are Investment Banking,
Research & Distribution and Execution Services in UK mid-cap
and growth companies to institutional clients, wealth managers and
private client brokers.
The Directors have assessed the Group's projected business
activities and available financial resources together with a
detailed cash flow forecast for the next 18 months from the date
these financial statements were approved. The Directors have used
base case and severe but plausible scenarios to perform the going
concern assessment.
The base scenario assumes:
-- Long-term sustainable growth of the Group as approved by the
Board in the Group's five-year business plan, including continued
growth in corporate clients
-- Increased interest rates, as well as inflationary pressures on all cost categories
-- Continued strategic investment in the Group, particularly in
relation to technology and execution services
The severe but plausible downside scenario assumes:
-- Worsening of the economic climate from the current historic
low levels, continuing to keep capital market activity low and
trading volumes reduced
-- An operational event occurs reducing profitability and cash
-- Management continue to rationalise costs where possible
The results of the scenario analysis consider the impact on
profitability, cash, liquid assets, regulatory capital and covenant
requirements. The severe but plausible downside scenario also
includes active management of the Group's liquid assets in order to
ensure the Group's ability to repay its long-term loans as
required, which would remove any potential covenant constraints. In
view of the Group's available financial resources, the Directors
believe that the Group is well placed to manage its business risks
successfully.
The Directors are satisfied that the Group has adequate
resources to continue in operational existence for a period of at
least 12 months from the date these financial statements are
approved and for the foreseeable future. The Group has a strong
focus on working capital management to ensure the payment of the
Group's liabilities as they fall due. There is also a focus on
monitoring the regulatory capital resource and requirements of Peel
Hunt LLP and the UK regulatory group to ensure that all regulatory
capital and liquidity requirements and covenant requirements are
met.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the financial statements for the year ended 31
March 2023.
The new standards or amendments to IFRS that became effective
and were adopted by the Group during the year had no material
effect on the financial statements.
2. Revenue
Year ended Year ended
31 Mar 2023 31 Mar 2022
GBP'000 GBP'000
Restated
--------------------------------------- ------------- -------------
Research payments and execution
commission 25,116 26,986
Execution Services revenue 33,810 46,112
Investment Banking fees and retainers 23,411 57,948
---------------------------------------- ------------- -------------
Total revenue for the period 82,337 131,046
======================================== ============= =============
We have reclassified GBP3.5m from Research payments and
Execution commission to Execution services revenue in the prior
year to better match how the business is managed. The effect of the
reclassification is immaterial in the current year.
3. Staff costs
Year ended Year ended
31 Mar 2023 31 Mar 2022
-------------------------------------
GBP'000 GBP'000
------------------------------------- ------------- -------------
Wages and salaries 39,946 33,179
Social security costs 5,597 6,051
Pensions costs 2,623 1,473
Other costs 86 762
-------------------------------------- ------------- -------------
Total staff costs for the period 48,252 41,465
Members' remuneration charged as an
expense - 9,908
Total staff costs and members'
remuneration charged as an expense
for the period 48,252 51,373
====================================== ============= =============
The average number of employees and members of the Group during
the period has increased to 316 (31 March 2022: 299).
4. Net finance expense
Year ended Year ended
31 Mar 2023 31 Mar 2022
------------------------------------
GBP'000 GBP'000
------------------------------------ ------------- -------------
Finance income
Bank interest received 692 15
Finance expense
Bank interest paid (52) (72)
Interest on lease liabilities (938) (934)
Interest accrued on long-term
loan (1,330) (658)
-------------------------------------
Finance expense for the period (2,320) (1,664)
------------------------------------- ------------- -------------
Net finance expense for the period (1,628) (1,649)
===================================== ============= =============
5. Tax charge
The Group tax charge in the year ended 31 March 2023 includes a
credit of GBP0.2m relating to tax charges in respect of prior
years.
6. Non-controlling interest
The non-controlling interest in the prior year relates to the
former individual members of Peel Hunt LLP; these amounts are
included in amounts due to members on the Consolidated Statement of
Financial Position.
7. Statement of Financial Position items
(a) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Depreciation is charged to the
income statement on a straight-line basis over the estimated useful
economic lives of each item.
(b) Intangible assets
Intangible assets represent internally generated intangible
assets, computer software and sports debentures. Amortisation is
charged to the income statement on a straight-line basis over the
estimated useful economic lives of each item. Internally generated
intangible assets are amortised over three years, computer software
is amortised over five years and sports debentures are amortised
over the life of the ticket rights.
Internally generated intangible assets comprises capitalised
development costs for certain technology developments for key
projects in the Group. The expenditure incurred in the research
phase of these internal projects is expensed. Intangible assets are
recognised from the development phase if and only if certain
specific criteria are met in order to demonstrate the asset will
generate probable future economic benefits and that its costs can
be reliably measured. Amortisation begins when the asset is
available for use.
(c) Right-of-use asset and lease liabilities
The right-of-use asset and lease liabilities (current and
non-current) represent the two property leases that the Group
currently uses for its offices in London and New York.
(d) Market and client debtors and creditors
The market and client debtor and creditor balances represent
unsettled sold securities transactions and unsettled purchased
securities transactions, which are recognised on a trade date
basis. The majority of open bargains were settled in the ordinary
course of business (trade date plus two days). Market and client
debtor and creditor balances in these financial statements include
agreed counterparty netting of GBP11.9m (31 March 2022:
GBP17.4m).
(e) Financial instruments
Financial assets and financial liabilities are recognised in the
statement of financial position when the Group becomes a party to
the contractual provisions of the financial instrument. The type of
financial instruments held by the Group at 31 March 2023 and 31
March 2022 are consistent with those held at prior year end. The
majority of financial instruments are classified as 'Level 1', with
quoted prices in active markets.
(f) Stock borrowing collateral
The Group enters into stock borrowing agreements with a number
of institutions on a collateralised basis. Under such agreements,
securities are purchased with a commitment to return them at a
future date and price. The securities purchased are not recognised
on the statement of financial position. The cash advanced is
recorded on the statement of financial position as cash collateral
within trade and other debtors, the value of which is not
significantly different from the value of the securities purchased.
The total value of cash collateral held on the statement of
financial position is GBP2.4m (31 March 2022: GBP2.8m).
(g) Long-term loans
During the year the Group repaid GBP6m of the outstanding Senior
Facilities Agreement. The balance outstanding at year end is GBP21m
(31 March 2022: GBP27m).
8. (Loss)/earnings per share
Year ended Year ended
31 March 2023 31 March 2022
------------------------------------- =============== ================
Basic weighted average number
of ordinary shares in issue during
the year 119,197,519 71,231,123
Dilutive effect of share option
grants 1,605,000 259,971
====================================== =============== ================
Diluted weighted average number
of ordinary shares in issue during
the year 120,802,519 71,491,093
====================================== =============== ================
Basic (loss)/earnings per share is calculated on total
comprehensive (loss)/income for the year, attributable to the
owners of the Company, of GBP(1.3m) (31 March 2022: GBP11.0m) and
119,197,519 (31 March 2022: 71,231,123) ordinary shares, being the
weighted average number of ordinary shares in issue during the
year. Diluted earnings per share is calculated after adjusting for
the number of options expected to be exercised from the share
option grants.
The Company has 1,605,000 (31 March 2022: 259,971) of dilutive
equity instruments outstanding as at 31 March 2023.
9. Post balance sheet event
Since the year end the Company has accelerated GBP6m of
principal repayments of the Senior Facilities Agreement (SFA) (see
Note 7(g) - Long-term loans), reducing the outstanding balance to
GBP15m. As a result, GBP3m of scheduled principal repayments in
each of September 2023 and March 2024 are no longer due. The
accelerated repayments are estimated to save approximately GBP0.3m
of interest expense throughout the year ending 31 March 2024. The
available Revolving Credit Facility (RCF) remains at GBP30m and the
interest rates applicable to both the SFA and RCF remain unchanged.
Alongside the accelerated repayments, the Company has negotiated a
temporary reduction in its interest cover covenant up to, and
including, 31 December 2023.
10. Reconciliation of (loss)/profit before tax to cash from operating activities
Year ended Year ended
31 March 2023 31 March 2022
----------------------------------------
GBP'000 GBP'000
---------------------------------------- ----------------------------------- ------------------------------------
(Loss)/profit before tax for
the period (1,488) 41,228
Adjustments for:
Depreciation and amortisation 4, 251 4,154
Impairment loss on loans and receivables 277 244
Fair value gain on sale of securities
not held for trading _ 27
Increase in provisions 37 109
Foreign exchange movement on deferred
tax asset - (8)
Equity settled share-based payments 647 -
- IFRS 2 charge
Revaluation of Right-of-use asset
and Lease liability (71) (52)
Net finance costs 1,628 1,649
Change in working capital:
Increase in net securities held for
trading (4,446) (4,068)
Decrease in net market and client
debtors 4,458 12,373
Increase in trade and other debtors (2,339) (4,017)
Decrease in net amounts due to
members (21,837) (116,565)
(Decrease)/increase in trade and other
creditors (12,572) 3,001
----------------------------------------- ----------------------------------- ------------------------------------
Cash used in operations (31,455) (61,925)
----------------------------------------- ----------------------------------- ------------------------------------
Interest received 692 15
Corporation tax paid (136) (6,164)
Net cash used in operations (30,899) (68,074)
========================================= =================================== ====================================
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR GZGMVRVGGFZG
(END) Dow Jones Newswires
June 16, 2023 04:05 ET (08:05 GMT)
Peel Hunt (LSE:PEEL)
過去 株価チャート
から 4 2024 まで 5 2024
Peel Hunt (LSE:PEEL)
過去 株価チャート
から 5 2023 まで 5 2024
