Peel Hunt, the London broker for mid and small-cap companies, said its revenue dropped by almost a quarter in the six months to 28 September, immediately prior to its £280m listing on London’s AIM market at the end of that month.
Revenue sank 23.4 per cent to £71.4m, down from £93.2m in the same period a year earlier, which the City broker said was in line with its expectations, after its “exceptional trading and heightened market activity” due to the pandemic in the first half last year reverted to more normal levels in the last six months.
Profit before tax more than halved to £29.5m, down from £56.6m a year earlier, which it largely attributed to the costs of its IPO at the end of September.
Its net assets were the only thing that remained constant, at £50.0m, in line with last year’s £50.1m, they increased by net proceeds when it raised £112m for its listing.
Investors will be keeping an eye on where £40m of this funding, which was earmarked for investments into the broker’s next phase of growth, will be spent.
Peel Hunt said it had increased its headcount by double-digit percentage points in the period, and otherwise said its outlook for future growth “remains positive”, but didn’t specify any particular tech investments.
It did, however, say the firm had signed a long-term five-year agreement with the leading provider of trading and order management systems, giving it “flexibility and the capacity to continue to grow.”
Its investment banking arm achieved record results in the period, with revenue up 43 per cent to £32.7m, retainer income surging 15 per cent due to new client wins, and the average market cap of its clients rose by 15 per cent to £731.2m, up from £632.6m a year earlier.
“We continue to grow our number of retained Investment Banking clients and have a healthy deal pipeline with a strong balance of transactions,” said CEO Steven Fine.
“We’re well positioned to execute our growth plans, which include opening a European office to support our growing distribution franchise across the continent. We remain on track to deliver on our budget for the year.”
In addition to its trading services, the group provides corporate broking and equity research. As at the end of September, it had 162 corporate clients with an average market cap of around £775m, and distributed its research to over 1,200 institutions.
It’s a more lacklustre set of results than the ones Peel Hunt reported alongside its intention to float in September, which included a full-year revenue surge to £197m in the year to March 2021, up from £96m the year earlier.
Trading activity for the broker had boomed during peak pandemic, as companies sought cash to weather the first economic lockdown and then sustain a wider recovery.
Founded in 1989, Peel Hunt was majority-owned by current and former employees before its IPO, after staff and investors led a buyout of the company from Belgian bank KBC in 2001.