REG - Peel Hunt Limited - Full-Year Results
13/06/2024 07:00
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RNS Number : 2219S Peel Hunt Limited 13 June 2024
Peel Hunt Limited
Full-Year Results
For the year ended 31 March 2024
Continued resilience in difficult 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 2024 ("FY24").
Steven Fine, Chief Executive Officer, said:
"Despite the challenging market backdrop, revenues have grown year on year
and, whilst this wasn't quite sufficient to offset the inflationary cost
environment, the business is well positioned as capital markets activity
builds.
During the year we made good strategic progress, winning some of our
largest corporate clients to date and building ever stronger relationships
with our existing client base. In addition, we opened our Copenhagen office
and our retail access product RetailBook raised funds to start its journey as
an independent fully regulated business.
We are seeing tentative signs that a recovery from the lows of the last two
years is underway, and we are delighted to have supported two clients with
their initial public offerings on the London market as announced this month."
Highlights
· Overall performance
o Revenue for the full year is up approximately 4% year-on-year to £85.8m
(FY23: £82.3m) despite prolonged capital markets inactivity
o Continued cost pressures during the year meant that the business produced
a loss before tax (LBT) of £(3.3)m (FY23: LBT £(1.5)m)
o Costs rationalised where possible, including minimising Group interest
costs by accelerating long-term debt repayments
· Strong balance sheet
o Net assets of £91.8m and cash balances of £37.9m
o Capital base remains comfortably in excess of minimum regulatory
requirements
· Business division performance
o Investment Banking revenues were £32.6m (FY23: £23.4m), an increase of
39.1%. 18 new client wins during the period, meaning we now act for 150
corporate clients of which 43 are in the FTSE 350
o Execution Services revenues reduced to £29.6m (FY23: £33.8m) in line
with the overall lower value traded in the market
o Revenue from Research & Distribution was down 5.9% at £23.6m (FY23:
£25.1m), consistent with market trends
· Strategic progress
o Continued to evolve our corporate client base - during FY24, the average
market capitalisation of our corporate clients increased by 9.0% to £752m,
outperforming the FTSE All-share Index over the same period, with the
aggregate market capitalisation of those clients having risen by 5.4% to over
£110bn
o Invested in the platform in a measured way, adding talent in key areas
such as senior hires into our Investment Banking and Institutional Electronic
Trading teams
o Further strengthened our European mid-cap distribution with the opening of
Peel Hunt Europe, headquartered in Copenhagen
o RetailBook raised the funds for the next stage of its growth and received
FCA approval on 2 April 2024. We continue to believe that there is a
significant opportunity for RetailBook to provide increased retail investor
participation, particularly as capital markets recover
· Our strategic progress and resilient balance sheet put us in a
strong position to benefit from any improvement in market conditions
· The accelerated pace of companies leaving the UK market is an
ongoing challenge. Peel Hunt is taking a leading role in the reform agenda,
advocating for innovative solutions to revitalise UK equity markets. Many
important policy initiatives are already underway, and we continue to use our
connectivity to help drive further progress.
Outlook
Recent UK economic data, inflation falling towards the Bank of England's
target rate and the prospect of lower interest rates in the coming months all
indicate an improving macroeconomic outlook. We are seeing an increase in
activity in both our Execution Services and institutional trading businesses.
Public M&A is highly active across the market as bid activity in respect
of undervalued UK assets continues. Against this backdrop, equity capital
markets (ECM) activity is beginning to build from the low levels of the last
two years and, whilst the IPO market has not yet fully re-opened, UK investors
are increasingly receptive to high quality companies, with Peel Hunt having
acted on two announced IPOs on the London market this month. Whilst challenges
remain, we are becoming cautiously more confident of a broader recovery in ECM
activity.
Key statistics
Financial highlights 2024 2023 Change
Revenue £85.8m £82.3m 4.3%
Loss before tax £(3.3m) £(1.5m) 120.0%
Basic EPS (2.7)p (1.1)p (145.5)%
Dividend - - -
Compensation ratio 59.0% 58.6% 0.4ppts
Operational highlights
Cash £37.9m £27.4m 38.3%
Net assets £91.8m £93.1m (1.4)%
Corporate clients 150 155 (3.2)%
Average market cap of clients £752.3m £690.5m 9.0%
For further information, please contact:
Peel Hunt: via Powerscourt
Steven Fine, CEO
Sunil Dhall, CFOO
Powerscourt (Financial PR): +44 (0)20 7250 1446
Justin Griffiths
Gilly Lock
Russ Lynch
peelhunt@powerscourt-group.com
Grant Thornton UK LLP (Nominated Adviser): +44 (0)20 7728 2942
Philip Secrett
Colin Aaronson
Elliot Peters
Keefe, Bruyette & Woods (Corporate Broker): +44 (0) 20 7710 7600
Alistair McKay
Alberto Moreno Blasco
Fred Walsh
Notes to editors
Peel Hunt is a leading UK investment bank that specialises in supporting
mid-cap and growth companies. It provides integrated investment banking advice
and services to UK corporates, including equity capital markets, private
capital markets, M&A, debt advisory, investor relations and corporate
broking. The Company's joined up approach combines these services with expert
research and distribution and an execution services hub that provides
liquidity to the UK capital markets, delivering value to global institutions
and trading counterparties alike. The Company is admitted to trading on AIM
(LON: PEEL) and has offices in London, New York and Copenhagen.
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.
OPERATING AND FINANCIAL REVIEW
Group revenue performance
This year's revenue of £85.8m was consistent with market expectations, and
higher than the previous year (FY23: £82.3m). This was due to stronger
performance from our M&A team, despite Investment Banking revenues being
otherwise constrained by subdued ECM activity. Our trading income from
Execution Services and commission income from Research & Distribution fell
year on year because of reduced trading activity in the markets and a fall in
value traded.
Revenue comprises the following:
FY24 FY23 %
£'000 £'000 Change
Investment Banking revenue 32,567 23,411 39.1%
Execution Services revenue 29,638 33,810 (12.3)%
Research & Distribution revenue 23,629 25,116 (5.9)%
Total revenue for the year 85,834 82,337 4.3%
Our joined-up business model, combining specialist advice, high-quality
research, broad distribution channels and strong market share in trading
volumes, continues to put us in a good position for a recovery in the markets.
Our sector specialist approach and ongoing, targeted investment in our
business areas, including in our people and technology, remain important tools
in pursuing our strategic priorities.
Investment Banking
FY24 FY23 %
£'000 £'000 Change
Investment Banking fees 23,795 14,622 62.7%
Investment Banking retainers 8,772 8,789 (0.2)%
Investment Banking revenue 32,567 23,411 39.1%
The difficult markets have continued to affect Investment Banking revenues in
ECM, with low levels of both primary and secondary fundraisings. Nevertheless,
we continued to diversify our investment banking model during the year,
notably acting as financial adviser to several of our longstanding corporate
clients in UK public market M&A transactions. This has resulted in
revenues of £32.6m in FY24, up 39.1% (FY23: £23.4m). In addition, we won
several high-quality corporate mandates, most notably in the FTSE 250, and
established ourselves as a prominent financial adviser.
Our people remain our most valued asset and, despite the challenging
environment, we have retained our core team as well as our sector and product
expertise, providing our clients with quality and consistency in difficult
times. These attributes have contributed to the evolution of our client base,
adding major corporate clients throughout the financial year. Our inaugural
FTSE 250 conference in June 2024 is a clear sign of our ambition; a
significant number of FTSE 250 companies attended, alongside a broad audience
of high-profile investors from multiple geographies and jurisdictions.
Our joined-up business model gives us a unique level of insight between
institutional clients and corporate clients and is key to our reputation as a
trusted adviser. This year, we appointed a new Head of Product to optimise
collaboration within our business. This will ensure our clients continue to
receive a consistently high-quality service, while helping to create stronger
integration between our corporate services, research and distribution and
trading capabilities. We believe that our model is a true differentiator for
our business.
Our deep sector knowledge means we're able to act for public and private
companies alike, and we're starting to see the benefit of investing in our
Private Capital Markets team, with the team nurturing high-quality
relationships across the sector, from early in the client lifecycle and
beyond.
Technology remains a key part of our day-to-day operations, and we continue to
invest in our products to make life easier, simpler and more efficient for our
clients and ourselves. In particular, we have developed our data analytics
capabilities to help identify key themes and trends and support decisions and
recommendations.
Greater diversification in our Investment Banking services, in particular
M&A, has helped counter lower ECM transaction volumes. Our main focus in
the coming months will be to continue building our market share in M&A
transactions, consolidating our position in Private Capital Markets while also
continuing to further build our corporate franchise.
Execution Services
FY24 FY23 %
£'000 £'000 Change
Execution Services revenue 29,638 33,810 (12.3)%
The Execution Services team generated revenue of £29.6m (FY23: £33.8m), a
reduction of 12.3% on the prior year. We were able to retain a leading trading
position, with a 14.9% (FY23: 13.3%) share of total LSE volume and ranked
number one by notional value among our peers, with only major global
investment banks ahead of us in the rankings.
Despite some challenges in a subdued trading environment for UK small cap,
increased competition on the Retail Service Provider network (RSP) and lower
levels of market liquidity in general, our performance has been resilient,
with diversified revenue streams supporting our wider business. In particular
Systematic Trading, ETFs, Fixed Income and Investment Companies have continued
to provide consistent returns.
We continue to focus on our strategic goal of being a key liquidity provider,
and maintaining a strong market share. We are already connected to an array of
execution platforms, and the improvements we're making will support existing
strategies and clients. They will enable us to target new platforms and
counterparties, so that we can continue to expand our liquidity provision.
Technology is a differentiator for our business and fundamental to our
competitive edge. Our traders work closely with their technology colleagues to
make our systems even more efficient. For example, we are continuously
improving our proprietary trading tool, Peel Hunt Automated Trading (PHAT), to
ensure we continue to provide fast access to liquidity for our counterparties
and clients.
This year, as well as depressed trading levels and reduced liquidity, we have
encountered increased competition, with additional market makers joining the
RSP network. We continue to adapt to tighter spreads and lower margins by
diversifying into alternative liquidity sources, which give us access to
incremental, differentiated liquidity for both clients and counterparties.
Our performance in less favourable market conditions is testament to our
team's experience and discipline, operating within strict risk management
parameters to support our overall financial resilience.
Looking ahead, our focus will be to ensure we remain a key liquidity provider
and retain our leading market share in trading. We'll keep enhancing our
execution capabilities through ongoing strategic investment in technology to
ensure efficient trading and liquidity access across the market cycle.
Research & Distribution
FY24 FY23 %
£'000 £'000 Change
Research payments and execution commission 23,629 25,116 (5.9)%
Research & Distribution have performed well in the face of challenging
market conditions and macroeconomic headwinds. Revenue from research payments,
execution commission and core trading was down 5.9% at £23.6m (FY23:
£25.1m), consistent with market trends. During the year, we have once again
strengthened our market position by deepening our relationships with existing
clients and broadening our footprint across jurisdictions.
Through our stable platform, consistent engagement and differentiated
integrated business model, we have continued to support our clients in a
difficult market. The experience and quality of our research, distribution and
core trading teams are an essential part of our long-term strategic focus, and
we continue to invest in the business for the future to remain the partner of
choice for our clients.
Our strategic plans to expand our international distribution took a
significant step forward in January 2024 with the opening of our new office in
Copenhagen. This reinstates pre-Brexit access to institutional investors
across Europe and will allow us to accelerate our Continental European
business development, opening new trading relationships and research
agreements.
In North America, we have continued to build our corporate access offering,
leveraging our best-in-class research and highly-rated sales team. Together
with our Continental European team and our growing Rest of World presence we
are able to showcase UK listed and private companies to an increasingly global
audience. This provides our corporate clients with seamless, differentiated
and highly efficient international access to relevant, deep pools of capital.
We have also continued to invest in our rapidly growing and differentiated
low-touch electronic trading platform, hiring two experienced electronic
traders to oversee its development. This is another example of how we offer
enhanced liquidity to our institutional clients on an international scale. We
see low-touch execution services as a natural complement to our high-touch
execution services and an important tool in deepening our institutional
relationships.
Technology helps our Research team work more efficiently. Our research
database, launched in FY23, is helping our analysts develop more detailed and
informative research for clients and we are incorporating artificial
intelligence tools into our research platform. We have continued to expand our
multimedia products, using our dedicated recording studio to produce
high-quality podcasts and videos for investors.
Meanwhile, our reputation for speaking up on behalf of our clients and UK plc
is growing, thanks in part to our expanding library of thematic reports on
topics such as the de-equitisation of UK equity markets and how to
reinvigorate them. Senior members of the Peel Hunt team, including our Head of
Research, are considered authoritative voices, and our business is working
closely with regulators and the UK government to enhance the overall market.
This is fundamentally important for the health of the UK economy as well as
the UK equity market.
Other financial information
Operating costs
FY24 FY23 %
£'000 £'000 Change
Staff costs 50,643 48,252 5.0%
Non-staff costs 37,399 34,125 9.6%
Total administration costs 88,042 82,377 6.9%
Compensation ratio 59.0% 58.6% 0.4ppts
Period-end headcount 303 310 (2.3)%
Average headcount 309 316 (2.2)%
Despite the ongoing macroeconomic challenges, we have continued investing in
people and our strategic priorities, whilst maintaining a resilient financial
position.
This year, that included salary increases, targeted to retain our key talent
and strong performers, recruiting staff in our Copenhagen office and strategic
hires into our electronic trading team. While we balanced these strategic
hires with ongoing work to rationalise overall staff costs and numbers, staff
costs in FY24 were higher than FY23. Overall, average headcount decreased by
2.2%.
Our non-staff costs are dominated by large technology contracts that are
essential for the smooth running of our business, and these costs rose in line
with inflation in FY24. The Group also experienced higher costs for
professional fees and audit services, something that is affecting all listed
businesses. In establishing our Copenhagen office and RetailBook, the Group
also incurred professional and start-up costs. Both of these represent
important investments in line with our strategic priorities.
Following the end of the financial year, we have continued to monitor
group-wide expenditure and rationalise staff numbers, associated staff costs
and technology costs, as well as other key areas of discretionary spend.
The measures we have taken on staff costs have seen the Group experience some
one-off costs in the first half of FY25, with the expected associated savings
in the second half of the new financial year.
Profit and loss
The combination of subdued revenue, targeted strategic investments and
inflationary pressures meant that the Group made a loss in FY24, although we
saw an improvement in revenue versus FY23. Despite our efforts to rationalise
costs where possible, the majority of our cost base is fixed. We minimised
Group interest costs during the year by accelerating long-term debt
repayments, carefully managing working capital to limit the use of any
unnecessary short-term borrowing, and maximising returns on surplus funds.
Loss before tax for the year was £(3.3)m, representing an increase of 120.0%
compared to the previous year.
Basic EPS decreased by 145.5% to (2.7)p per share (2023: (1.1)p).
Strategic investments
During the year, we have invested permanent capital to support the regulatory
capital requirements of Peel Hunt Europe, based at our new office in
Copenhagen, which is now fully operational. Peel Hunt Europe reinstates the
Group's pre-Brexit access to institutional investors across Europe.
Similarly, we continued to carefully invest capital and staff resources to
help establish RetailBook as a standalone FCA-regulated entity, with approval
granted effective 2 April 2024. Just before the year end, RetailBook
successfully closed an external funding round of £2.5m, allowing it to bring
in new external investors. Together with support from our collaboration
partners, Hargreaves Lansdown, Jefferies, Rothschild & Co, and Deutsche
Numis, it provides RetailBook with the ability to focus on the next stage of
its growth. Going forward, RetailBook will operate separately from the Group
with its own independent governance structure. While the fundraising prior to
year end reduced the Group's overall holding in RetailBook, we continued to
have a greater than 50% holding as at year end. We expect to reduce our
holding to below 50% in the first half of FY25.
We have incorporated the financial impact of both investments into the Group
financial results for FY24.
Balance sheet
The Group's net asset position as at 31 March 2024 was £91.8m (31 March 2023:
£93.1m), representing a decrease of 1.4% from 31 March 2023, due to the EBT
share purchases during the year and the loss in FY24.
Capital and liquidity
Our cash position has increased, to £37.9m as at 31 March 2024; this includes
a £15m drawn balance from our RCF. This is higher than the £27.4m at the end
of FY23, with £15m of the RCF drawn at year end being partly offset by higher
inventory positions in our Execution Services business and the accelerated
£6m repayment in long-term debt in the first half of the year.
Long-term debt now stands at £15m and we have access to a £30m RCF which we
renewed during the year. Shortly after year end in May 2024, we obtained a
new, more flexible £10m overdraft facility on similar terms to the RCF. We
are in the process of reducing the RCF by an equivalent amount. We did not
materially rely on the RCF for operating during the year.
Our Own Funds coverage over net assets was 532% at the end of FY24, compared
to 555% at the end of FY23, which demonstrates that we continued to operate
well in excess of our minimum regulatory capital requirements. We achieved
this by maintaining risk exposures within the agreed limits despite the
reduction in Group net assets.
Dividend
The Board is not proposing a dividend for the year.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
Audited for the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023
Continuing activities Note £'000 £'000
Revenue 2 85,834 82,337
Administrative expenses 3 (88,042) (82,377)
Loss from operations (2,208) (40)
Finance income 4 1,117 692
Finance expense 4 (2,244) (2,320)
Other income 115 180
Operating loss for the year (3,220) (1,488)
Share of loss from associate (42) -
Loss before tax for the year (3,262) (1,488)
Tax 5 61 166
Loss for the year (3,201) (1,322)
Other comprehensive income/(expense) for the year - -
Total comprehensive expense for the year (3,201) (1,322)
Attributable to:
Owners of the Company (3,201) (1,322)
Non-controlling interests - -
Loss for the year (3,201) (1,322)
Attributable to:
Owners of the Company (3,201) (1,322)
Non-controlling interests - -
Total comprehensive expense for the year (3,201) (1,322)
Loss per share - attributable to owners of the Company:
Basic 8 (2.7)p (1.1)p
Diluted 8 (2.7)p (1.1)p
Consolidated Statement of Financial Position
Audited as at 31 March 2024
As at 31 March 2024 As at 31 March 2023
£'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 6,555 8,092
Intangible assets 1,901 1,152
Investments in associates 538 -
Right-of-use assets 13,741 15,889
Deferred tax asset 409 273
Total non-current assets 23,144 25,406
Current assets
Securities held for trading 60,104 54,144
Market and client debtors 551,943 471,504
Trade and other debtors 19,613 15,546
Cash and cash equivalents 37,929 27,410
Total current assets 669,589 568,604
LIABILITIES
Current liabilities
Securities held for trading (35,305) (32,062)
Market and client creditors (508,980) (421,953)
Trade and other creditors (7,280) (4,214)
Revolving credit facility (15,000) -
Lease liabilities (2,956) (2,867)
Long-term loan (6,000) (6,000)
Provisions (708) (576)
Total current liabilities (576,229) (467,672)
Net current assets 93,360 100,932
Non-current liabilities
Long-term loan (9,000) (15,000)
Lease liabilities (15,754) (18,192)
Total non-current liabilities (24,754) (33,192)
Net assets 91,750 93,146
Consolidated Statement of Financial Position
Audited as at 31 March 2024
As at 31 March 2024 As at 31 March 2023
£'000 £'000
EQUITY
Ordinary share capital 40,099 40,099
Other reserves 50,076 53,047
Total shareholders' equity 90,175 93,146
Non-controlling interests 1,575 -
Total equity 91,750 93,146
Consolidated Statement of Changes in Equity
Audited for the year ended 31 March
Ordinary Other Total shareholders' equity Non- controlling interest Total
share reserves equity
capital
Group £'000 £'000 £'000 £'000 £'000
Balance as at 1 April 2022 40,099 60,035 100,134 - 100,134
Loss for the year - (1,322) (1,322) - (1,322)
Other comprehensive income - - - - -
Total comprehensive expense - (1,322) (1,322) - (1,322)
Transactions with owners
Equity-settled share-based payments reserve - 647 647 - 647
Purchase of Company shares - (2,581) (2,581) - (2,581)
Dividends paid - (3,732) (3,732) - (3,732)
Balance as at 31 March 2023 40,099 53,047 93,146 - 93,146
Loss for the year - (3,201) (3,201) - (3,201)
Other comprehensive income - - - - -
Total comprehensive expense - (3,201) (3,201) - (3,201)
Transactions with owners - -
Equity-settled share-based payments reserve - 688 688 - 688
Purchase of Company shares - (458) (458) - (458)
Transaction with non-controlling interests - - - 1,575 1,575
Balance as at 31 March 2024 40,099 50,076 90,175 1,575 91,750
Consolidated Statement of Cash Flows
Audited for the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023
Note £'000 £'000
Net cash generated from/(used in) operations 10 7,027 (30,899)
Cash flows from investing activities
Purchase of property, plant and equipment (76) (511)
Purchase of intangible assets (1,078) (1,087)
Investments in associates (580) -
Net cash used in investing activities (1,734) (1,598)
Cash flows from financing activities
Interest paid (1,435) (1,382)
Dividends paid - (3,732)
Lease liability payments (3,456) (3,117)
Purchase of Company shares (458) (2,581)
Non-controlling interests 1,575 -
Drawdown from the revolving credit facility 15,000 -
Repayment of long-term loan (6,000) (6,000)
Net cash generated from/(used in) financing activities 5,226 (16,812)
Net increase/(decrease) in cash and cash equivalents 10,519 (49,309)
Cash and cash equivalents at start of period 27,410 76,719
Cash and cash equivalents at the end of year 37,929 27,410
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Peel Hunt Limited (the Company) is a non-cellular company limited by shares
having admitted its shares for trading on AIM, a market operated by the London
Stock Exchange plc, on 29 September 2021. The Company is registered in
Guernsey. Its registered office is Mont Crevelt House, Bulwer Avenue, St
Sampson, Guernsey GY2 4LH (previously Ground Floor, Dorey Court, Admiral Park,
St Peter Port, Guernsey GY1 2HT). The consolidated financial statements of the
Company comprise 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 (£'000), except where indicated otherwise.
The financial information has been prepared on the historical cost basis,
except for derivatives and financial assets and liabilities which are valued
at fair value through profit and loss (FVTPL). 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
· Prolonged increased interest rates, as well as inflationary
increases on all cost categories
· Continued strategic investment in the Group, particularly in
relation to technology and further diversification in our revenue
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 continues to rationalise costs where possible
The results of the scenario analyses 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 mitigate 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 resources 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 2024.
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 March 2024 31 March 2023
£'000 £'000
Research payments and execution commission 23,629 25,116
Execution Services revenue 29,638 33,810
Investment Banking fees and retainers 32,567 23,411
Total revenue for the year 85,834 82,337
3. Staff costs
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Wages and salaries 41,874 39,946
Social security costs 5,914 5,597
Pensions costs 2,741 2,623
Other costs 114 86
Total staff costs charged as an expense for the year 50,643 48,252
The average number of employees of the Group during the year decreased to 309
(31 March 2023: 316).
4. Net finance expense
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Finance income
Interest received 1,117 692
Finance expense
Interest paid (85) (52)
Interest on lease liabilities (809) (938)
Interest accrued on long-term loan (1,350) (1,330)
Finance expense for the year (2,244) (2,320)
Net finance expense for the year (1,127) (1,628)
5. Tax charge
The Group tax charge in the year ended 31 March 2024 includes a credit of
£0.3m (31 March 2023: £0.2m).
6. Non-controlling interest
The amount of non-controlling interest is measured at the non-controlling
interest's proportionate share of the subsidiary's identifiable net assets.
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 comprise 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 and car leases.
(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 £10.2m (31 March 2023: £11.9m).
(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 2024 are consistent with those held at the 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 borrowed with
a commitment to return them at a future date. The securities borrowed are not
recognised on the statement of financial position. The cash pledged 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 borrowed. The total value of cash collateral
held on the statement of financial position is £5.4m (31 March 2023: £2.4m).
(g) Long-term loans
During the first quarter of the financial year the Company accelerated £6m of
the Senior Facilities Agreement (SFA) scheduled principal repayments due in
each of September 2023 and March 2024, reducing the outstanding balance to
£15m (31 March 2023: £21m).
Alongside the accelerated repayments, the Company negotiated a temporary
reduction in its interest cover covenant up to and including 31 December 2023
with no changes to the interest rate applicable to the SFA.
(h) Revolving credit facility
As at 31 March 2024 £15.0m of the £30m Revolving Credit Facility was drawn
(31 March 2023: £nil).
8. Loss per share
Year ended Year ended
31 March 2024 31 March 2023
Basic weighted average number of ordinary shares in issue during the year 117,069,636 119,197,519
Dilutive effect of share option grants 8,755,598 1,605,000
Diluted weighted average number of ordinary shares in issue during the year 125,825,234 120,802,519
Basic loss per share of (2.7)p (31 March 2023: (1.1)p) is calculated on total
comprehensive expense for the year, attributable to the owners of the Company,
of £(3.2)m (31 March 2023: £(1.3)m) and 117,069,636 (31 March 2023:
119,197,519) ordinary shares, being the weighted average number of ordinary
shares in issue during the year.
The Company has 8,755,598 (31 March 2023: 1,605,000) of dilutive equity
instruments outstanding as at 31 March 2024.
9. Post balance sheet event
Shortly after year end in May 2024, we obtained a new, more flexible £10m
overdraft facility on similar terms to the RCF.
10. Reconciliation of loss before tax to cash from operating
activities
Year ended Year ended
31 March 2024 31 March 2023
£'000 £'000
Loss before tax for the financial year (3,262) (1,488)
Adjustments for:
Depreciation and amortisation 4,353 4,251
Expected credit loss on financial assets held at amortised cost 186 277
Increase in provisions 131 37
Equity settled share-based payments - IFRS 2 charge 688 647
Revaluation of right-of-use asset and lease liabilities 33 (71)
Net finance expense 1,127 1,628
Change in working capital:
(Increase) in net securities held for trading (2,717) (4,446)
Decrease in net market and client debtors 6,588 4,458
(Increase) in trade and other debtors (4,595) (2,339)
(Decrease) in net amounts due to members - (21,837)
Increase/(decrease) in trade and other creditors 3,049 (12,572)
Cash generated from/(used in) operations 5,581 (31,455)
Interest received 1,117 692
Corporation tax credit/(paid) 329 (136)
Net cash generated from/(used in) operations 7,027 (30,899)
END
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