Peel Hunt Limited · LSE:PEEL
Peel Hunt — FY2023 Earnings Presentation
37 slides from Peel Hunt's earnings presentation, June 2023
Slide 1: For the year ended 31 March 2023
For the year ended 31 March 2023 JUNE 2023
Slide 2: Agenda
Agenda 01 Overview & Highlights 02 Market Update 03 Business & Financials Update 04 Strategy & Outlook 05 Q&A 06 Appendices 2
Slide 3: Overview and Highlights
OVERVIEW AND HIGHLIGHTS
Slide 4: Overview and highlights
Overview and highlights Strategic progress in difficult markets • Overall: Continued strategic progress, although low market activity due to macroeconomic and geopolitical factors markets have impacted results £82.3m Revenue • Investment Banking: Extremely low capital markets activity, particularly
Slide 5: Market Update
MARKET UPDATE
Slide 6: Market Update: Subdued markets, uncertainty on duration
Market Update Subdued markets, with uncertainty around how long this will last Commentary The IBES consensus median EPS growth Compounding the issue of the growing UK rate for CY23 continues to edge lower1 equity discount to the Eurozone and US2 Macroeconomics 14% 30% 30% • Slowing GDP growth reboun
Slide 7: Market Update: Record low ECM activity
Market Update Record low ECM activity, but showing some signs of life Commentary • Early signs that ECM activity is slowly Minutes between Books Covered Deal Value GBP restarting Pricing Date RNS Launch Time Message Time Launch and Books Company Deal Type (m) Covered • A number of secondary selldown
Slide 8: Market Update: Consolidation within the market
Market Update Consolidation within the market Commentary • A lack of capital market activity has resulted Rank Stockbroker Total Market Cap of Stock Market Total Number of Stock Market in consolidation across the investment Clients (Feb ‘23) (£m) Clients (Feb ‘23) banking industry 1 Morgan Stanley &
Slide 9: Business and Financials Update
_ BUSINESS AND FINANCIALS UPDATE
Slide 10: Illustrative Consolidated Statement of Comprehensive Income
Illustrative Consolidated Statement of Comprehensive Income Illustrative Consolidated Statement of Comprehensive Income Headlines FY23 FY22 £m Actual Illustrative % change YOY • Difficult market environment directly impacted £'000 £'000 our headline numbers, particularly in Investment Banking revenu
Slide 11: Balance Sheet & Capital Position Overview
Balance Sheet & Capital Position Overview Commentary Cash Position and Net Asset Value • The Group’s net asset position as at 31 March 2023 was £93.1m, a decrease of 7.0% £100.1m £93.1m from compared with last year • The business maintained a good cash £48.4m £76.7m balance at the year end of £27.4m
Slide 12: Investment Banking Overview
Investment Banking Overview Commentary Investment Banking revenue (£m) • Investment Banking revenues in FY23 were £43.9m £57.9m down at £23.4m, compared with £57.9m in FY22 £8.3m £7.2m £23.4 £49.6m • In FY23 retainers increased by 5.8% to £36.7m £8.8m £8.8m, up from prior year £14.6m FY21 FY22 FY23
Slide 13: Execution Services Overview
Execution Services Overview Commentary Execution Services revenue breakdown • Execution Services team has performed well FY 21 FY 22 FY 23 during the year despite the challenging economic climate, generating revenue of £33.9m (FY22: £46.2m) Small-cap / AIM FTSE 350 International £117.2m £46.1m £33.8
Slide 14: Research & Distribution Overview
Research & Distribution Overview Commentary Research and Distribution revenue • Revenue from research payments and £35.9m execution commissions was down 7.3% at £27.0m £25m (FY22: £27m) £25.1m • RPA revenues have moderately increased from prior year, resulting from our opening of £6.4m £6.3m £7.1m n
Slide 15: Operating Costs Overview
Operating Costs Overview Commentary Staff costs (£m) • Actual total staff costs in FY23 were lower 175 58.6% 60.0% than FY22, reflecting the reduction in 155 47.1% 44.3% 50.0% revenue and the associated reduction in 135 variable remuneration expense. This has Staff Cost inc 115 40.0% resulted in an
Slide 16: Environmental, Social, and Governance (ESG)
Environmental, Social, and Governance (ESG) Progress Our sustainability targets Our People and Communities 40% CARBON NEUTRALITY BY 2025 NET ZERO BY 2040 192 62% 805 WOMEN EMPLOYEES OF TEAM HOURS SPENT VOLUNTEERS BY 2035 VOLUNTEERED VOLUNTEERING 27 ACTIVITIES SUPPORTED WINNING ‘BEST APPROACH TO WELL
Slide 17: Strategy and Outlook
- STRATEGY AND OUTLOOK
Slide 18: Overview: Investment in Investment Banking
Overview Overview Investment in Investment Banking Throughout the year we have dedicated time to A period of sustained subdued capital market activity has given us the opportunity to spend move forward with our strategic priorities, with the aim of delivering long-term value for all of time focusing
Slide 19: Strategic progress: FinTech
Strategic progress FinTech - growing our franchise The opportunity • >2,500 FinTech companies in UK representing a multi-trillion pound industry • Remains underserved by the investment banking community, with a £2 billion growth capital funding gap • No other mid-cap bank established in this key spa
Slide 20: RetailBook
RetailBook In February 2023, we announced plans to move our proprietary REX platform into a new standalone company called RetailBook. REX at Peel Hunt Strategic Partners • In 2015, PH LLP developed REX, a retail capital markets portal Journey of RetailBook to date • Enables issuers to access retail
Slide 21: European Office
European Office European office Copenhagen • Received regulatory approval for our European office • Office in Copenhagen anticipated to be operational in Q2 FY-Mar-24 to allow unrestricted access to investors across the EU and EEA • Dedicated Continental European team of 3 sales people, 1 sales trad
Slide 22: Strategic progress: International Distribution Platform
Strategic progress International Distribution Platform North America Europe and rest of the world Peel Hunt Distribution 814 135 Investment institutions receiving our Investment institutions receiving our research research • Dedicated Continental European team of 3 • Dedicated team of 4 sales people
Slide 23: Strategic progress: Technology
Strategic progress Technology FY23 Highlights Turning data into intelligence Our technology team has developed powerful new digital infrastructure which will help our people New cloud-based data lake launched to create generate deeper market insights and turn data the infrastructure to underpin our
Slide 24: Strategy: FY23 Five strategic priorities
Strategy FY23 – Five strategic priorities 1 2 3 4 5 Extend our leading Expand our Advance our position Embed technology in Leverage our unique liquidity provision investment banking as a distribution everything we do culture to boost capabilities powerhouse performance Overview & Market Update Busin
Slide 25: Outlook: Current Trading and Outlook
Outlook Current Trading and Outlook • Challenging market conditions have persisted into FY24 and macro-economic backdrop could remain challenging for some time • M&A pipeline building as UK mid-caps remain attractively valued, our focus in this area is creating near term fee opportunities • Private
Slide 26: Q&A
Q&A
Slide 27: Appendices
APPENDICES
Slide 28: Unaudited Illustrative Financials
Unaudited Illustrative Financials
Slide 29: Unaudited Illustrative Consolidated Income Statement
Unaudited Illustrative Consolidated Income Statement Unaudited for the year ended 31 March 23 The unaudited illustrative statement of comprehensive income, set out below, has been prepared for Notes the comparative period to illustrate the impact that the reorganisation of the Group’s corporate 1) A
Slide 30: FY 21/22 Illustrative Financials
FY 21/22 Illustrative Financials Moving from a partnership to public shareholder structure Pre-IPO Group Adjustments Illustrative Post-IPO Group As at 31 March FY22 As at 31 March FY22 1 Administrative costs: Year ended £’000 £’000 • All LLP partners convert to Year ended employees £’000 £’000 • Add
Slide 31: FY22 Illustrative Group Profit Reconciliation
FY22 Illustrative Group Profit Reconciliation Administrative Expenses1 Include: Additional Actual Financials- Include: Revised Exclude: One-off Exclude: Tax charges in Include: Illustrative 40% Illustrative - Group Corporation tax incl. Group (Consol) compensation model2 expenses2 respect of prior y
Slide 32: Audited Financial Statements
Audited Financial Statements
Slide 33: Consolidated Income Statement
Consolidated Income Statement Income Statement £’000 FY23 FY22 Change Research payments & Execution commission 25,116 26,986 (6.9%) Execution Services Revenue 33,810 46,112 (26.7%) Investment Banking fees and retainers 23,411 57,948 (59.6)% Revenue 82,337 131,046 (37.2)% Administrative expenses (82,
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet Balance Sheet £’000 FY23 FY22 Change Non-current assets 25,406 27,929 (9.0%) Long positions of dealing operations 54,144 50,341 (7.6%) Market and client debtors 471,504 559,485 (15.7%) Other debtors 15,546 13,200 17.8% Cash 27,410 76,719 (68.2%) Current assets 568,604 699,
Slide 35: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows Cash Flow £’000 FY23 FY22 Change Net cash generated from operations (30,899) (68,074) 54.6% Cash flows from investment activities Purchase of tangible assets (511) (1,346) 62.0% Purchase of intangible assets (1,087) (6) (18,016.7%) Disposal of Equity Investments
Slide 36: Regulatory Consolidation Group Capital Position
Regulatory Consolidation Group Capital Position Audited for the year ended 31 March 2023 Capital Position £’000 FY23 FY22 Change Total own funds 93,146 100,135 (7.0%) Own Funds Requirements Risk-to-Market 15,856 16,304 (2.75%) Risk-to-Firm 601 1,293 (53.5%) Risk-to-Client 326 360 (9.4%) Total own fu
Slide 37: Peel Hunt Disclaimer/Risk Warning
Peel Hunt Disclaimer/Risk Warning This document has been prepared by Peel Hunt LLP (“Peel Hunt”) and is for This document and the information contained herein are for information only and the use of the addressee only. It may not be copied or distributed to any other do not constitute: (i) an invita