Peel Hunt flags full-year loss amid challenging market

3rd Apr 2024 07:16

(Sharecast News) - Peel Hunt said in an update on Wednesday that it expected revenue for the financial year just ended to align closely with market projections, reaching about £85.5m - a notable uptick of around 4% compared to £82.3m in the 2023 period.

The AIM-traded company said that growth, amid enduring challenging conditions in equity capital markets throughout the 12 months ended 31 March, was not adequate to offset cost pressures.

As a result, it expected to report a full year loss, broadly in line with market forecasts.

The rise in revenue was primarily propelled by investment banking, with merger and acquisition revenues notably contributing a significant portion of investment banking deal fees.

That reflected tangible progress in diversifying revenues across various investment banking products.

Despite resilient research payments, Peel Hunt said it saw a modest reduction in overall research and distribution revenues due to subdued institutional trading activity market-wide.

Similarly, execution services revenue declined, in line with lower market volumes overall.

Strategically, Peel Hunt said it made significant headway during the year, positioning itself strongly for improved market conditions.

Notably, the company expanded its corporate client base, securing 18 new client wins, including five FTSE 350 clients.

Peel Hunt said it now represented 150 corporate clients, with 43 in the FTSE 350, and the combined market capitalisation of its clients increased by 5.81% to over £110bn.

The firm invested in its platform in a measured manner, leveraging its robust balance sheet and market dislocation to recruit talent in key areas, including senior hires in investment banking and institutional electronic trading teams.

Additionally, Peel Hunt said it bolstered its European mid-cap distribution by establishing Peel Hunt Europe, based in Copenhagen.

Its subsidiary RetailBook meanwhile secured funds for its forthcoming growth stage and received FCA approval on 2 April.

Peel Hunt said it anticipated RetailBook operating independently during the first half of the 2025 financial year.

Looking ahead, Peel Hunt said it expected continued low market trading volumes and subdued ECM issuance.

However, it remained actively engaged in public mergers and acquisitions, holding financial advisory mandates on both the buy and sell side.

Although IPO activity in the UK remained tepid, Peel Hunt noted increased IPO activity in Europe and improving sentiment towards IPOs in the UK, with investors increasingly receptive to high-quality companies.

At 0948 BST, shares in Peel Hunt were down 5.14% at 120p.

Reporting by Josh White for Sharecast.com.