Peel Hunt swings to loss as revenue slides

16th Jun 2023 07:43

(Sharecast News) - Peel Hunt reported a decline in revenue and profitability in its final results on Friday, due to unusually low capital markets activity throughout the 2023 financial year.

The AIM-traded firm said revenue for the 12 months ended 31 March totalled £82.3m - a decrease from £131m in 2022.

It incurred a loss before tax of £1.5m, swinging from a profit before tax of £41.2m in the prior year.

In the investment banking division, revenues fell to £23.4m from £57.9m, although the group added 19 new retained corporate clients, including seven from the FTSE 350.

Peel Hunt said it currently represented 40 FTSE 350 clients, reflecting an increase of 37.9% over the past five years.

Execution services revenues remained higher than pre-pandemic levels, totalling £33.8m, although they were lower year-on-year due to reduced market volumes compared to 2022, when they totalled £46.1m.

The company said it maintained its market-leading position with a 13.3% share of London Stock Exchange volumes.

Its research and distribution division delivered a resilient performance, with revenues of £25.1m despite an overall drop in market activity.

The group said it further strengthened its position as a market leader in mid-cap North American and continental European distribution, and continued to expand its institutional client base.

Peel Hunt said it maintained a robust financial position, with net assets of £93.1m and cash balances of £27.4m.

The company added that its capital base exceeded the minimum regulatory requirements comfortably.

Looking ahead, Peel Hunt said that although macroeconomic conditions remained challenging, it was seeing a gradual improvement in its merger and acquisition pipeline since the beginning of the 2024 financial period.

UK mid-cap valuations remained attractive, with the board saying there were early indications of a pick-up in capital markets activity.

The group said it would continue to advance its strategic priorities while prudently managing the business through the downturn.

"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," said chief executive officer Steven Fine.

"This can be seen in our 2023 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 and Advisory business."

Fine said the company was "pleased" to be relaunching REX as RetailBook alongside a number of its peers, and to have received regulatory approval for its EU platform.

"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."

At 0818 BST, shares in Peel Hunt were down 3.06% at 98.88p.

Reporting by Josh White for Sharecast.com.