Peel Hunt Ltd on Friday said ‘unusually low’ market activity caused its revenue to fall and its swing to a loss in financial 2023, but that its pipeline had slowly begun to improve since the start of the current year.

The London-based stock broker and investment bank said it swung to a pretax loss of £1.5 million in the year ended March 31, compared with its £41.2 million profit the previous year. Revenue for financial 2023 was down by 37% to £82.3 million from £131.0 million.

Peel Hunt said both figures were affected by ‘unusually low capital markets activity’ throughout the year, and that it has taken action to rationalise costs and ‘partially’ mitigate inflationary cost pressures.

‘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,’ commented Chief Executive Officer Steven Fine.

‘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 [mergers & acquisitions] and advisory business.’

Revenue for Peel Hunt’s investment banking division was down 60% to £23.4 million from £57.9 million, due to fewer transactions suppressing client activity and delaying initial public offering mandates. In execution services it dropped by 37% to £82.3 million from £131.0 million. Peel Hunt however said its research payments & execution commission arm was more ‘resilient’, with revenue only down 6.9% to £25.1 million from £27.0 million. It said momentum in new account openings ‘somewhat offset’ the impact of reduced market volumes.

Peel Hunt did not declare a dividend for financial 2023, down from its 3.1 pence per share payout the year before.

Peel Hunt said cash at March 31 was £27.4 million, down by 64% from £76.7 million at the same time one year prior. Net assets fell by 7.0% to £93.1 million from £100.1 million. However it said the balance sheet remained sufficiently strong to let it take advantage of market dislocation.

Looking ahead, Peel Hunt predicted that the macroeconomic climate might ‘remain challenging for some time’. However, it said it has observed ‘tentative signs’ of capital markets activity recovering and a ‘gradual improvement’ in its M&A pipeline since the start of the current financial year. UK mid-cap valuations also remain attractive, it added.

‘Our diversified business model and cost discipline have helped us maintain a strong balance sheet,’ said CEO Fine, ‘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.’

Shares in Peel Hunt were down 3.1% at 98.88p in London on Friday.

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