REG - Peel Hunt Limited - Half-Year Results
29/11/2024 07:00
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RNS Number : 0987O Peel Hunt Limited 29 November 2024
29 November 2024
Peel Hunt Limited
Half-Year Results for the six months ended 30 September 2024
Improved performance across all business areas
Peel Hunt Limited ('Peel Hunt', the 'Company') together with its subsidiaries
(the 'Group') today announces unaudited interim results for the period ended
30 September 2024 ('H1 FY25'). FY25 refers to the financial year ending on 31
March 2025.
Highlights
· H1 FY25 performance reflected a more positive macroeconomic
backdrop
o Group revenue £53.8m (H1 FY24: £42.7m), an increase of approximately 26%
year on year
o Profit before tax of £1.2m (H1 FY24: loss before tax of £0.8m)
o Adjusted profit before tax((1)) of £4.6m (H1 FY24: adjusted loss before
tax of £0.5m)
o Net assets of £94.8m (FY24: £91.8m) and cash balances of £18.0m (FY24:
£37.9m), with the reduction in cash largely due to repayment of £18m of
Group funding facilities
o Capital remains comfortably in excess of regulatory requirements
· Increase in performance during the period across all business
divisions
o Investment Banking:
§ Revenues up at £22.6m (H1 FY24: £17.3m)
§ Improved performance in core equity capital markets business, including
acting on two IPOs and executing equity fundraises and block trades for a
number of our clients
§ M&A advisory fees comprised a large proportion of overall deal revenues
§ Continued to win new corporate clients and successful organic growth of
existing clients led to several index promotions
§ We now act for 4 FTSE 100 companies and 42 FTSE 350 companies with the
average market capitalisation across all corporate clients increasing 14.6%
from £752m at the end of FY24 to £862m
§ RetailBook, which officially launched as an independent business in
September, has already acted on its first Main Market IPO
o Research & Distribution:
§ Revenues up at £13.6m (H1 FY24: £10.5m) despite continued outflows from
UK equities
§ Continued to build out our capabilities for our clients, particularly in
low touch electronic trading
o Execution Services:
§ Revenues up at £17.6m (H1 FY24: £14.8m)
§ Trading activity increased in the first four months of FY25, but volumes
reduced towards the end of the period given uncertainty around the UK Budget
and US election
· Leveraged our position as a leading UK-focused investment bank,
using our ideas and well-respected thought leadership to champion and
reinvigorate UK capital markets
Financial and operating highlights
Financial highlights H1 FY25 H1 FY24 Change
Revenue £53.8m £42.7m 26.0%
Profit/(loss) before tax £1.2m (£0.8m) 250.0%
Adjusted profit/(loss) before tax((1)) £4.6m (£0.5m) 1,020.0%
Profit/(loss) after tax £0.7m (£0.7m) 200.0%
Compensation ratio 61.2% 58.6% 2.6ppts
Operating highlights H1 FY25 FY24 Change
Cash £18.0m £37.9m (52.5)%
Net assets £94.8m £91.8m 3.3%
Investment Banking clients 145 150 (3.3)%
Average market cap of clients £862.1m £752.3m 14.6%
Note:
(1) Adjusted profit/(loss) before tax is a non-statutory measure,
which shows the underlying performance of the Group excluding share-based
payment charges. This is calculated as the Group's profit/(loss) before tax
less share-based payment charges of £3.4m (H1 FY24: £0.3m).
Steven Fine, Chief Executive Officer, commented:
"We were able to capitalise on improving market conditions in the first few
months of FY25, most notably executing two IPOs, collecting material M&A
fees and generating increased trading revenues.
However, the recovery slowed over the summer period and investor sentiment was
impacted in the last few weeks of the period due to concerns around the UK
Budget, particularly in relation to AIM.
We welcome recently proposed policy initiatives, including pension reforms and
HM Treasury's call for evidence to support a growth and competitiveness
strategy for UK financial services, which are designed to increase investment
and liquidity in UK risk assets."
For further information, please contact:
Peel Hunt: via Sodali & Co
Steven Fine, CEO
Sunil Dhall, CFOO
Sodali & Co (Financial PR): +44 (0)20 7250 1446
Justin Griffiths
Gilly Lock
Russ Lynch
peelhunt@sodali.com
Grant Thornton UK LLP (Nominated Adviser): +44 (0)20 7728 2942
Philip Secrett
Colin Aaronson
Elliot Peters
Keefe, Bruyette & Woods (Corporate Broker): +44 (0) 20 7710 7600
Alistair McKay
Alberto Moreno Blasco
Fred Walsh
Notes to editors
Peel Hunt is a leading, independent UK investment bank that specialises in
supporting mid-cap and growth companies. It provides integrated investment
banking advice and services to UK corporates, including equity capital
markets, private capital markets, M&A, debt advisory, investor relations
and corporate broking. The Company's joined up approach combines these
services with expert research and distribution and an execution services hub
that provides liquidity to the UK capital markets, delivering value to global
institutions and trading counterparties alike. The Company is admitted to
trading on AIM (LON: PEEL) and has offices in London, New York and Copenhagen.
Market conditions
Throughout H1 FY25 we saw an increase in equity issuances, particularly by
larger companies, although overall activity remains below historical averages.
IPO activity appears to be gradually resuming on the Main Market and AIM.
M&A bid activity increased, with 19 active bids for FTSE 350 companies as
at 30 September 2024 compared with just two in 2023, reflecting greater
corporate appetite and confidence in the outlook for the UK.
Both the FTSE 100 and FTSE 250 rose, by 3.6% and 5.9%, respectively, as part
of a global rally in equity markets despite the uncertainty caused by ongoing
conflicts in Ukraine and the Middle East. However, the AIM All-Share dipped by
0.4% amid uncertainty about whether the government would withdraw inheritance
tax relief on AIM investments.
Although UK-focused equity funds continued to experience net outflows
throughout the period, there were some signs of improving sentiment towards
the UK by global investors as currency markets initially reacted well to a
more stable UK political and economic environment following the 4 July general
election. Further inflation declines allowed the Bank of England to begin its
rate-cutting cycle in August.
Overview of results
Group revenue for the period was £53.8m (H1 FY24: £42.7m) with a profit
before tax of £1.2m (H1 FY24: loss before tax of £0.8m), reflecting the
improved macroeconomic outlook in the first few months of the half and uptick
in UK equity capital markets activity. Our adjusted profit before tax, which
shows the underlying performance of the Group excluding share-based payment
charges, was £4.6m (H1 FY24: adjusted loss before tax of £0.5m). Our balance
sheet remained strong, with net assets of £94.8m as at 30 September 2024
(FY24: £91.8m) and capital comfortably in excess of regulatory requirements
and cash balances of £18.0m (FY24: £37.9m).
Divisional reviews
Investment Banking
H1 FY25 H1 FY24 Change
Investment Banking fees £18.4m £12.9m 42.6%
Investment Banking retainers £4.2m £4.4m (4.5)%
Investment Banking revenue £22.6m £17.3m 30.6%
In Investment Banking, revenues increased by 31% to £22.6m (H1 FY24: £17.3m)
as we saw improved performance in our core equity capital markets ('ECM')
business, particularly in the first quarter of FY25, where we acted as joint
global coordinator on a Main Market IPO and nominated adviser and sole
bookrunner on an AIM IPO. The slight reduction in revenue from retainers
reflects a reduction in the number of corporate clients largely due to M&A
activity and the strategic evolution of our client base.
Whilst market-wide ECM activity remained below historical averages in the
period, we were able to help a number of our clients execute both equity
fundraises and block trades. M&A advisory fees were a larger proportion of
overall Investment Banking deal revenues in the period, although this did
include a material fee from a deal announced at the end of FY24 and completed
in H1 FY25.
During the period, we had a number of corporate client wins, as well as
successful organic growth of our existing clients leading to several index
promotions. We now act for four FTSE 100 companies and 42 FTSE 250 companies.
Consequently, the average market capitalisation of our retained corporate
clients has risen by 14.6% since the end of FY24, from approximately £752m to
approximately £862m, and the aggregate market capitalisation has risen by
10.0% to approximately £124bn.
A combination of our focus on distribution, advice, market share, influence
and access has continued to extend our reach as a trusted, well connected and
stable investment banking partner to UK mid-cap and growth companies.
Research & Distribution
H1 FY25 H1 FY24 Change
Research payments (including commission sharing arrangements) £2.7m £2.7m 0.0%
Execution commission (including core trading) £10.9m £7.8m 39.7%
Research payments and execution commission £13.6m £10.5m 29.5%
Revenues in our Research & Distribution business were modestly up on the
same period last year at £13.6m (H1 FY24: £10.5m), despite continued
outflows from UK equities. The increase in execution commission was due in
part to our continued focus on building out our capabilities for our clients,
particularly in low touch electronic trading.
In Research, revenues from research payments remained consistent year on year.
The appointment of our first Chief Economist enables us to provide thought
leadership on the UK economy in a global context to our clients alongside our
existing research coverage. We continued to develop AI applications for the
benefit of staff and clients, which are improving productivity and driving new
insights as we seek innovative ways to interact with our significant
repository of proprietary research.
Execution Services
H1 FY25 H1 FY24 Change
Execution Services revenue £17.6m £14.8m 18.9%
Execution Services revenues were £17.6m, an increase of 19% year on year (H1
FY24: £14.8m). Trading volumes increased across Execution Services in the
first four months of FY25 but slowed towards the end of H1 given uncertainty
around the outcomes of the UK Budget, particularly concerns about the
withdrawal of IHT relief on AIM companies, and the US election.
Capital and liquidity
Net assets remained strong at £94.8m as at 30 September 2024 (H1 FY24:
£91.8m).
Our cash position decreased as we repaid £3m of the senior facility agreement
and invested in our trading book. We also repaid £15m of the revolving credit
facility ('RCF') in the period, which had been drawn down at the end of FY24
to provide short-term funding to facilitate client trading.
Long-term debt was £12m at 30 September 2024, and we have access to an
additional £30m of funding facilities, comprising £20m under the RCF and a
£10m overdraft facility. Both were undrawn at the end of the period.
We continue to operate well in excess of our regulatory capital requirements
with own funds requirements coverage over net assets of 550% at the end of H1
FY25 compared to 532% at the end of FY24. The increase in coverage from FY24
was due to an increase in Group net assets while maintaining risk exposures
within agreed limits.
Costs and people
H1 FY25 H1 FY24 Change
Staff costs £32.9m £25.0m 31.6%
Non-staff costs £19.6m £17.9m 9.5%
Total admin costs £52.5m £42.9m 22.4%
Compensation ratio 61.2% 58.6% 2.6ppts
Non-staff costs ratio 36.4% 41.9% (5.5)ppts
Change in headcount((1)) (3.9)% (1.8)% (2.1)ppts
Adjusted staff costs((2)) £29.5m £24.7m 19.4%
Non-staff costs £19.6m £17.9m 9.5%
Adjusted admin costs((2)) £49.1m £42.6m 15.3%
Adjusted compensation ratio 54.8% 57.8% (3.0)ppts
Non-staff costs ratio 36.4% 41.9% (5.5)ppts
Notes:
(1) Change in average headcount when compared to respective previous
financial year ends.
(2) Adjusted staff costs and adjusted admin costs is a measure
calculated as staff costs or admin costs less share-based payment charges
amounting to £3.4m (H1 FY24: £0.3m).
Average headcount decreased by 4.2% since the end of H1 FY24 as we continued
to actively manage headcount to ensure that the business operates efficiently
whilst maintaining excellent client service.
We continued our targeted investment in talent, in line with our strategic
priorities, and made selected senior hires into our Investment Banking team in
the Financials, Consumer, Industrials and Technology, Media & Telecoms
sectors. The hire of a new Head of Continental European Sales further
strengthens our European distribution platform.
Adjusted staff costs were higher than the prior period, which is largely due
to the accrued variable remuneration associated with the increase in revenue.
The increase also reflects one-off costs from headcount rationalisation and
targeted salary increases to ensure that we remain competitive and retain key
talent.
Non-staff costs were higher than the corresponding H1 FY24 figure because of
the impact of the inflationary environment over the last 18 months. The
largest uplift in costs was contractual increases in our key technology
agreements. Also included were costs associated with the electronic trading
desk, which was fully operational for the whole period, and increased costs
related to settlement costs and client-related travel.
Both staff and non-staff costs include costs associated with RetailBook and
our Copenhagen office being fully operational for the whole period.
Given the ongoing macroeconomic challenges, we continue to monitor costs in H2
FY25, whilst remaining focused on our strategic priorities and our ability to
capitalise on market recovery.
Responsible business
Throughout the first half of the year we built on previous work to ensure we
continue to be a responsible business. During the period our board-level ESG
Committee oversaw and contributed to discussions on achieving our
sustainability and diversity targets. There was a particular focus on
supporting engagement with our sustainability and diversity initiatives across
the business, with relevant training for employees and regular internal
communications. In line with our commitments for carbon neutrality and net
zero carbon emissions, the ESG Committee will shortly be reviewing our
refreshed Carbon Reduction Plan.
We continued to work with our charity partner, Become, and held a number of
fundraising events including a 400km cycle from London to Epernay by nine of
our employees that raised over £40,000 for the charity. As has been the case
in previous years, our employees were encouraged to volunteer their time to
support a range of causes in our local community.
Current trading and outlook
Trading in the first few weeks of our second half is in line with management
expectations. Although we have a solid pipeline of corporate transactions,
including M&A and IPOs, we expect a degree of uncertainty to persist in
the short term and consequently some of these transactions are more likely to
execute in our next financial year. Whilst sentiment in the UK has dipped
following the Budget and increased concerns around global trade are
suppressing risk appetite, UK economic fundamentals and consensus forecasts
for growth remain stable.
Steven Fine
Chief Executive Officer
29 November 2024
Forward-looking statements
This announcement contains forward-looking statements. Forward-looking
statements sometimes use words such as 'may', 'will', 'could', 'seek',
'continue', 'aim', 'anticipate', 'target', 'project', 'expect', 'estimate',
'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar
meaning. Past performance is no guide to future performance and any
forward-looking statements and forecasts are based on current expectations and
assumptions but relate to events and depend upon circumstances in the future
and you should not place reliance on them. These statements and forecasts are
subject to various risks and uncertainties and there are a number of factors
that could cause actual results or developments to differ materially from
those expressed or implied by forward-looking statements and forecasts.
The forward-looking statements contained in this document speak only as of the
date of this announcement and (except as required by applicable regulations or
by law) Peel Hunt does not undertake to publicly update or review any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Nothing in this announcement constitutes or should be construed as
constituting a profit forecast.
No offer of securities
The information, statements and opinions contained in this announcement do not
constitute or form part of, and should not be construed as, any public offer
under any applicable legislation, or an offer, or solicitation of an offer, to
buy or sell any securities or financial instruments in any jurisdiction, or
any advice or recommendation with respect to any securities or financial
instruments.
There are a number of key judgement areas, which are based on models and which
are subject to ongoing modification and alteration. The reported numbers
reflect our best estimates and judgements at the given point in time.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
Unaudited for the six months ended 30 September 2024
Six months ended Six months ended
30 Sep 2024 30 Sep 2023
Unaudited Unaudited
Continuing activities Note £'000 £'000
Revenue 2 53,787 42,677
Administrative expenses 3 (52,450) (42,866)
Profit/(loss) from operations 3 1,337 (189)
Finance income 5 927 510
Finance expense 5 (1,129) (1,139)
Other income 98 60
Operating profit/(loss) for the period 1,233 (758)
Share of loss from associate - (15)
Profit/(loss) before tax for the period 1,233 (773)
Tax (574) 94
Profit/(loss) for the period 659 (679)
Other comprehensive income for the period - -
Total comprehensive income/(expense) for the period 659 (679)
Attributable to:
Owners of the Company 889 (679)
Non-controlling interests 7 (230) -
Total comprehensive income/(expense) for the period 659 (679)
Earnings per share - attributable to owners of the Company
Basic 6 0.8p (0.6)p
Diluted 6 0.7p (0.6)p
Consolidated Balance Sheet
Unaudited as at 30 September 2024
As at 30 Sep 2024 As at 31 Mar 2024
Unaudited Audited
Note £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 6,021 6,555
Intangible assets 1,871 1,901
Right-of-use assets 12,518 13,741
Investments in associates 538 538
Deferred tax asset 1,373 409
Total non-current assets 22,321 23,144
Current assets
Securities held for trading 61,297 60,104
Market and client debtors 460,147 551,943
Trade and other debtors 13,767 19,613
Cash and cash equivalents 18,041 37,929
Total current assets 553,252 669,589
LIABILITIES
Current liabilities
Securities held for trading (36,352) (35,305)
Market and client creditors (403,785) (508,980)
Trade and other creditors (10,540) (7,280)
Revolving credit facility - (15,000)
Lease liabilities (2,758) (2,956)
Long-term loans (3,000) (6,000)
Provisions (774) (708)
Total current liabilities (457,209) (576,229)
Net current assets 96,043 93,360
Non-current liabilities
Long-term loans (9,000) (9,000)
Lease liabilities (14,594) (15,754)
Total non-current liabilities (23,594) (24,754)
Net assets 94,770 91,750
EQUITY
Ordinary share capital 40,099 40,099
Other reserves 53,326 50,076
Total shareholders' equity 93,425 90,175
Non-controlling interests 1,345 1,575
Total equity 94,770 91,750
Consolidated Statement of Changes in Equity
Unaudited for the six months ended 30 September 2024
Ordinary Share Capital Other reserves Total shareholders' equity Non-controlling interests Total equity
£'000 £'000 £'000 £'000 £'000
Balance as at 1 April 2023 40,099 53,047 93,146 - 93,146
Loss for the period - (679) (679) - (679)
Other comprehensive income - - - - -
Total comprehensive expense - (679) (679) - (679)
Transactions with owners
Share based payments - 324 324 - 324
Purchase of Company shares - (16) (16) - (16)
Balance as at 30 September 2023 40,099 52,676 92,775 - 92,775
Loss for the period - (2,522) (2,522) - (2,522)
Other comprehensive income - - - - -
Total comprehensive expense - (2,522) (2,522) - (2,522)
Transactions with owners
Share based payments - 364 364 - 364
Purchase of Company shares - (442) (442) - (442)
Transaction with non-controlling interests - - - 1,575 1,575
Balance as at 31 March 2024 40,099 50,076 90,175 1,575 91,750
Profit for the period - 889 889 (230) 659
Other comprehensive income - - - - -
Total comprehensive expense - 889 889 (230) 659
Transactions with owners
Share based payments - 2,837 2,837 - 2,837
Purchase of Company shares - (476) (476) - (476)
Balance as at 30 September 2024 40,099 53,326 93,425 1,345 94,770
Consolidated Statement of Cash Flows
Unaudited for the six months ended 30 September 2024
Six months ended 30 Sep 2024 Six months ended 30 Sep 2023
Unaudited Unaudited
Note £'000 £'000
Net cash generated from operations 9 1,461 5,019
Cash flows from investing activities
Purchase of tangible assets (179) (60)
Purchase of intangible assets (165) (815)
Investment in associate - (550)
Net cash used in investing activities (344) (1,425)
Cash flows from financing activities
Interest paid (775) (727)
Short term borrowings (15,000) -
Lease liability payments (1,754) (1,707)
Purchase of Company shares (476) (16)
Repayment of long-term loan (3,000) (6,000)
Net cash used in financing activities (21,005) (8,450)
Net decrease in cash and cash equivalents (19,888) (4,856)
Cash and cash equivalents at start of period 37,929 27,410
Cash and cash equivalents at end of period 18,041 22,554
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
Peel Hunt Limited (the 'Company') is a non-cellular company limited by shares
having its shares admitted for trading on AIM, a market operated by London
Stock Exchange plc, on 29 September 2021. The Company is registered in
Guernsey. Its registered office is Mont Crevelt House, Bulwer Avenue, St
Sampson, Guernsey GY2 4LH. The consolidated interim financial information of
the Company comprise the Company and its subsidiaries, together referred to as
the 'Group'.
The financial information contained within these condensed consolidated
interim financial statements is unaudited and has been prepared in accordance
with International Accounting Standard 34 Interim Financial Reporting ('IAS
34'). The Financial Statements should be read in conjunction with the annual
financial statements for the year ended 31 March 2024, which have been
prepared in accordance with UK-adopted international accounting standards
(International Financial Reporting Standards ('IFRS') and International
Financial Reporting Interpretations Committee ('IFRIC')) and with the
requirements of the Companies (Guernsey) Law, 2008.
The preparation of the condensed consolidated interim financial statements in
conformity with IAS 34 requires the use of certain critical accounting
judgements and significant estimates. It also requires the Board of Directors
to exercise its judgement in the application of the Group's accounting
policies. The accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 March 2024.
The financial information is presented in pounds sterling and all values are
rounded to the nearest thousand (£'000), except where indicated otherwise.
The financial information has been prepared on the historical cost basis,
except for derivatives, financial assets and liabilities measured at Fair
value through profit and loss ('FVTPL'). Historical cost is generally based on
the fair value of the consideration given in exchange for the assets.
These condensed consolidated interim financial statements have been prepared
on a going concern basis as the Directors have satisfied themselves that, at
the time of approving these condensed consolidated interim financial
statements, the Company and the Group have adequate resources to continue in
operational existence for at least the next twelve months.
During the period, there were no new standards or amendments to IFRS that
became effective and were adopted by the Company and the Group with a material
impact.
2. Revenue
Six months ended 30 Sep 2024 Six months ended
30 Sep 2023
Unaudited Unaudited
£'000 £'000
Research payments & Execution commission 13,616 10,503
Execution services revenue 17,592 14,834
Investment Banking revenue 22,579 17,340
Total revenues for the period 53,787 42,677
3. Profit from operations
The following items have been included in arriving at profit from operations:
Six months ended 30 Sep 2024 Six months ended 30 Sep 2023
Unaudited Unaudited
£'000 £'000
Depreciation and amortisation 923 970
Lease depreciation 1,197 1,172
Staff costs (see note 4) 32,865 24,996
Other non-staff costs 17,465 15,728
Total administrative costs 52,450 42,866
Other non-staff costs comprise expenses incurred in the normal course of
business, including technology costs, professional and regulatory fees,
auditors' fees, brokerage, clearing and exchange fees.
4. Staff costs
Six months ended 30 Sep 2024 Six months ended 30 Sep 2023
Unaudited Unaudited
£'000 £'000
Wages and salaries 24,488 20,407
Share based payment charges 3,440 324
Social security costs 3,492 2,848
Pensions costs 1,385 1,368
Other costs 60 49
Total staff costs charged as an expense for the period 32,865 24,996
Wages and salaries include variable compensation accruals.
The average number of employees of the Group during the period has decreased
to 297 (H1 FY24: 310). The number of employees of the Group at the end of the
period has decreased to 295 (H1 FY24: 308).
5. Net finance expense
Six months ended 30 Sep 2024 Six months ended 30 Sep 2023
Unaudited Unaudited
£'000 £'000
Finance income:
Bank interest received 927 510
Finance expense:
Bank interest paid (124) (28)
Interest on lease liabilities (354) (412)
Interest accrued on loans (651) (699)
Finance expense for the period (1,129) (1,139)
Net Finance expense for the period (202) (629)
6. Earnings per share/(loss)
Six months ended Six months ended 30 Sep 2023
30 Sep 2024
Number of shares Number of shares
Unaudited Unaudited
Weighted number of ordinary shares in issue during the period 116,891,735 117,239,017
Dilutive effect of share option grants 11,466,209 7,574,291
Diluted weighted average number of ordinary shares 128,357,944 124,813,308
in issue during the period
Basic earnings per share/(loss) is calculated on total comprehensive
income/(loss) for the six-month period, attributable to owners of the Company,
of £0.9m (H1 FY24: (£0.7)m) and 116,891,735 (H1 FY24: 117,239,017) ordinary
shares, being the weighted average number of shares in issue during the
period. Diluted earnings per share/(loss) is calculated after adjusting for
the number of options expected to be exercised from the share option grants.
The calculations exclude Company shares held by the Employee Benefit Trust on
behalf of the Group.
The Company has 11,466,209 (H1 FY24: 7,574,291) of dilutive equity instruments
outstanding as at 30 September 2024.
7. Non-controlling interest
The amount of non-controlling interest is measured at the non-controlling
interest's proportionate share of the subsidiary's identifiable net assets.
8. Balance sheet items
(a) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and impairment losses. Depreciation is charged to the Income Statement on a
straight-line basis over the estimated useful economic lives of each item.
(b) Intangible assets
Intangible assets represent internal software intellectual property, computer
software and sports debentures. Amortisation is charged to the Income
Statement on a straight-line basis over the estimated useful economic lives of
each item. Internal software intellectual property is amortised over 3 or 5
years, computer software is amortised over five years and sports debentures
are amortised over the life of the ticket rights.
Internal software intellectual property represents internally-generated
intangible assets and it comprises of capitalised development costs for
certain technology developments for key projects in the Group. The costs
incurred in the research phase of these internal projects are expensed.
Intangible assets are recognised from the development phase if certain
specific criteria are met in order to demonstrate the asset will generate
probable future economic benefits and that its costs can be reliably measured.
Amortisation begins when the asset is available for use.
(c) Right-of-use asset and lease liabilities
The right-of-use asset and lease liabilities (current and non-current)
represent the two property leases that the Group currently uses for its
offices in London and New York and car rental leases.
(d) Market and client debtors and creditors
The market and client debtor and creditor balances represent unsettled sold
securities transactions and unsettled purchased securities transactions, which
are recognised on a trade date basis. The majority of open bargains were
settled in the ordinary course of business (trade date plus two days). Market
and client debtor and creditor balances in these financial statements include
agreed counterparty netting of £7.7m (FY24: £10.2m).
(e) Financial instruments
Financial assets and financial liabilities are recognised in the Statement of
Financial Position when the Group becomes a party to the contractual
provisions of the financial instrument. The fair valuation hierarchy applied
is consistent with that outlined in the FY24 audited financial statements. The
value of 'Level 1' financial assets held by the Group at the end of H1 FY24
was £60.1m (FY24: £59.1m), 'Level 2' £0.1m (FY24: £0.0m) and 'Level 3'
£1.1m (FY24: £1.0m). The value of 'Level 1' financial liabilities held by
the Group at the end of H1 FY24 was £36.2m (FY24: £35.2m), 'Level 2' £0.0m
(FY23: £0.0) and 'Level 3' £0.2m (FY24: £0.1m).
(f) Stock borrowing collateral
The Group enters into stock borrowing agreements with a number of institutions
on a collateralised basis. Under such agreements securities are borrowed with
a commitment to return them at a future date. The securities borrowed are not
recognised on the Statement of Financial Position. The cash pledged is
recorded on the Statement of Financial Position as cash collateral within
trade and other debtors, the value of which is not significantly different
from the value of the securities borrowed. The total value of cash collateral
held on the Statement of Financial Position is £3.2m (FY24: £5.4m).
(g) Borrowings
The Group has committed funding facilities of up to £30.0m in order to
further support its general corporate and working capital requirements. During
the period the Group cancelled an existing £10.0m Revolving Credit Facility
(RCF) tranche and replaced it with a £10.0m overdraft facility.
As at 30 September 2024 the funding facilities were undrawn (FY24: £15.0m).
(h) Long-term loans
During the period we paid £3.0m of the principal repayments of the Senior
Facilities Agreement ('SFA'). As at 30 September 2024 £12.0m (FY24: £15.0m)
was outstanding.
(i) Post balance sheet events
There are no post balance sheet events.
9. Reconciliation of profit/(loss) before tax to cash from operating
activities
Six months ended Six months ended 30 Sep 2023
30 Sep 2024
Unaudited Unaudited
£'000 £'000
Profit/(loss) before tax for the period 1,233 (773)
Adjustments for:
Depreciation and amortisation 2,120 2,142
Expected credit loss on financial assets held at amortised cost 289 71
Increase in provisions 66 66
Movement on deferred tax asset - 49
Share based payments - IFRS 2 charge 2,837 324
Revaluation of Right-of-use asset and Lease liabilities 70 38
Net finance costs 202 629
Changes in working capital:
Increase in net securities held for trading (146) (7,590)
(Increase)/ decrease in net market and client debtors (13,399) 9,278
(Decrease)/increase in trade and other debtors 4,180 (378)
Increase in trade and other creditors 3,071 642
Cash generated from operations 523 4,498
Interest received 927 510
Corporation tax paid 11 11
Net cash generated from operations 1,461 5,019
END
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