REGISTERED NUMBER: |
Report of the Members and |
Audited Financial Statements |
for the Year Ended 31 March 2024 |
for |
HYBRIDAN LLP |
REGISTERED NUMBER: |
Report of the Members and |
Audited Financial Statements |
for the Year Ended 31 March 2024 |
for |
HYBRIDAN LLP |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Contents of the Financial Statements |
FOR THE YEAR ENDED 31 MARCH 2024 |
Page |
General Information | 1 |
Report of the Members | 2 |
Statement of Financial Position | 9 |
Notes to the Financial Statements | 10 |
HYBRIDAN LLP |
General Information |
FOR THE YEAR ENDED 31 MARCH 2024 |
DESIGNATED MEMBERS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
A trading name of PCM Accounting Limited |
2 Jardine House |
Harrovian Business Village |
Bessborough Road |
Harrow |
Middlesex |
HA1 3EX |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
The members present their report with the financial statements of the LLP for the year ended 31 March 2024. |
PRINCIPAL ACTIVITY |
The principal activity of the LLP in the year under review was that of brokers undertaking corporate finance and corporate broking, including fund raising activities for public and private small cap companies. |
REVIEW OF BUSINESS |
The members note the lacklustre financial results for the period for the Partnership, especially the lower level of profit. We are aware that market conditions in listed smaller companies are becoming less positive each year, during a decline in the fundraising environment for small caps and an ongoing increase in regulation. We are also aware and conscious that an inflationary, higher regulated, lower business volume environment is more generally persisting. It is paramount to members to maintain the integrity and culture of the Partnership, above profit and returns, despite the difficulties that the small cap community faces. The members also cannot see how the Partnership could further save costs or manage cash better. |
During the calendar year 2023, one of our core markets, AIM, had just 13 new listings which was the lowest number of Initial Public Offerings (IPOs) in the markets in c. a 30-year history. The lack of new listings and increase of de-listings and cancellations means that the number of companies listed on the AIM market is now at a 20-year low, with just 623 businesses currently registered on the market (as of 17th June, 2024). Some decline from the heights of circa 1,700 AIM quoted companies at any one time at its peak in 2007. Sharp rises in interest rates coupled with high inflation was not a conducive environment to raise capital for SMEs. There was an exodus from the public markets as investors sought the haven of cash savings accounts paying 5-6% interest. |
The Partnership continues to strive for professional excellence and variety also in its corporate client base, market activities, markets it is active in and type of client mandates. The Partnership continues to be relationship driven corporate finance led corporate broking, interacting with both private and listed corporate clients to a diverse investor base. |
There has been much consolidation of advisors in the SME sector. The Partnership started increasing its fees from mid-2021 but now sees downward pressure to 2019/2020 level of fees as its competitors - in the face of delistings of their clients - are looking to rebuild their client base and cut fees to compete and survive. The City backdrop is back to 2019 which the Partnership notes was tough. The small cap ecosystem is now almost sub scale and the structural market issues have to be resolved. Whilst sentiment is slowly improving, that is yet to translate into meaningful IPOs, fundraises, business and IPOs and fundraises that not only boost sentiment across the market, but are successful in raising the money and perform in the aftermarket. |
The members are aiming for the Partnership to have a small increase in current business levels in the next financial year from April, 2024 to March, 2025. The members look forward to maintaining and if possible growing the number of corporate clients both in the listed and also in the unlisted environment. A lot depends on how the IPO market fares over the next six months. We were encouraged by the success of the Raspberry Pi IPO in June 2024 which raised £166m valuing the company at £541m - sentiment tends to trickle down from larger IPOs to the small cap ecosystem so this bodes well for future sentiment. |
The members believe that 2024/25 will continue to hold further uncertainty that has prevailed since 2022, but diversity of client base and revenue streams will be key to maintaining the current levels of business, as well as a tight control of costs and seeking to sign new relationships on more favourable terms where possible. |
The financial instruments and key performance indicators used by the Limited Liability Partnership arise wholly and directly from its activities and they comprise of turnover, turnover by segment, -profitability, cash at bank and creditors, as well as pipeline opportunities. |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
DESIGNATED MEMBERS |
The designated members during the year under review were: |
Mrs C L Noyce |
Constance Securities Limited |
In addition to the designated members, the non-designated members during the year were: |
A J Barber |
E K Ford |
RESULTS FOR THE YEAR AND ALLOCATION TO MEMBERS |
The profit for the year before members' remuneration and profit shares was £313,371 (2023 - £847,205 profit). |
MEMBERS' INTERESTS |
Details of members' interests are set out in detail in the notes to the financial statements. |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
PILLAR 3 DISCLOSURE |
1. INTRODUCTION |
The Basel II Accord has been implemented by the European Union through the Capital Requirements Directive ("CRD"). The CRD details the standard regulatory capital framework for the financial services industry within the EU and consists of three pillars: |
Pillar 1 specifies the minimum capital requirements of firms to cover credit, market, and operational risk; |
Pillar 2 requires firms to assess the need to hold additional capital to cover risks not covered under Pillar 1; and |
Pillar 3 requires a set of disclosures to be made which enable market participants to access information on a firm's capital, risk exposures and risk management procedures. |
The following is Hybridan LLP's Pillar 3 disclosure in accordance with the requirements of the Financial Conduct Authority ("FCA") Rules. |
2. DATE OF DISCLOSURE |
This disclosure is based on Hybridan's financial position as reported to the FCA at 31st March 2024. |
3. SCOPE OF APPLICATION |
Hybridan LLP is authorised and regulated by the FCA and is a member firm of the London Stock Exchange plc, and a member firm of the Aquis Stock Exchange (AQSE) and its two markets. |
4. RISK MANAGEMENT |
The Managing Partner and Partners are responsible for identifying risk and setting risk appetite. |
As there is no Market Risk and Credit Risk (including Concentration Risk) will only relate to receivables in the form of trade debtors and prepayments, and these will be tightly controlled by the Managing Partner, the focus of the Hybridan risk management framework will be on Operational and other associated risks. A full list of risk factors considered by the firm's Managing Partner is set out below. |
4.1 Inflationary pressures and lower growth environment |
Existing cash reserves and stability in the business, have provided Hybridan LLP with a sustainable financial position for both the short and medium terms. |
The board continues to closely monitor and assess developments, and the listed SMEs (our client base) continue to face challenges in this environment of further regulatory and audit changes, changes in the primary and secondary markets' structures and also ongoing inflation and other pressures related to the performance of SMEs from a share price perspective and also when it comes to the number of potential investors that invest in listed micro and small cap companies. |
4.2 Key person risk and hiring |
Hybridan's business strategy is dependent on generating sufficient income from transactional revenues and retainer income. The firm is dependent on several key individuals. The business is focused on hiring those who are both well connected in the small cap market and who have the ability to generate revenues and introduce new corporate clients, and the next generation of enthusiastic salespeople, corporate brokers and corporate financiers. Hybridan is committed to Diversity and Inclusion (D&I) and focused on hiring both the best from a diverse broad base of candidates always. The current climate and push to ESG policies and best practice means it is a great time to keep D&I at the forefront of driving one's business forward. |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
4.3 Negligence Risk |
As the firm will be providing advisory services to corporate clients, there is a risk that negligent advice may be given to a client. Additionally, as investors may rely upon the firm to carry out due diligence on investee companies, there is a risk that the due diligence may be negligent. These factors could result in legal action being taken against the firm for negligence (with a substantial monetary impact) and / or reputational damage to the firm (again with loss of business leading to monetary impact). These risks can never be fully mitigated but with strong project management discipline and a "four eyes" policy, (whereby all but the most insignificant matters are discussed, reviewed, and agreed by the Managing Partner and senior members of staff) a high degree of professionalism is assured. |
The expertise of the Managing Partner over several decades covers different disciplines such as research, sales and trading, corporate broking, but other senior employees bring corporate broking, sales, trading, management consultancy and accountancy, however the maintenance of appropriate levels of expertise (whether sourced internally or externally) can also go some way to mitigating risks. We believe that our internal systems and controls will reduce the possibility of these risks crystallising. |
Hybridan subscribes to a full program of training for the Managing Partner and her staff. The firm is also a member firm of the Quoted Companies Alliance (QCA) and the Managing Partner is Deputy Chair of the QCA, to keep a close eye on market changes and regulatory updates. The Managing Partner and junior members of the team are members of the Chartered Institute for Securities & Investment (CISI) for training and learning purposes. All members of the team are encouraged to attend Legal and Accounting led market teach ins. Learning, training and building on best practice is a great way of not only motivating staff, but building on their knowledge as a natural hedge to erroneously providing incorrect commercial advice. The Managing Partner also sits on the AQSE advisory panel advising on regulatory matters. |
4.4 Investor Risk |
There is a risk that an investor that commits to participate in a fundraising (typically by signing a placing letter) defaults on its contractual obligations to subscribe for the relevant securities. This risk is mitigated by only accepting orders from investors that the Partnership considers to be in good standing and repute in the market and by ensuring that Hybridan's liability to corporate clients to remit the proceeds of a fundraising is limited only to the extent to which investors have remitted cleared funds. |
Ongoing continuous regulatory changes are ever present and time consuming. The greatest risk is lack of liquidity for smaller companies in volatile inflationary ridden markets forcing investors to go up the market capitalisation curve away from small and mid-caps. An increased cost of further FCA reviews of the primary and secondary markets with grave consequences for smaller companies potentially creates uncertainty. |
4.5 Corporate Risk |
There is a risk that we are misled by corporate clients for which we raise funds. We mitigate this risk by performing our own due diligence on the materials provided by the corporate client (which is subject to our four eyes policy), making third party checks as we consider appropriate and in the case of fundraising for new clients or on IPOs taking personal warranties from the client's directors, as well as always from the company, in a placing agreement prepared by Hybridan's lawyers. Lawyers are now always retained by Hybridan. In the case of a subsequent fundraising, a placing agreement would still be required but the warranties and indemnities are likely to be sought from the corporate client only, although directors' warranties are often sought and a limited scope on director undertakings are always obtained. It is important that Company communications have relevant disclosures carving out Hybridan's responsibility for the materials and Hybridan indeed provides its corporate client with the relevant disclaimer. |
4.6 Business Continuity and Disaster Recovery |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
Hybridan's business activities are not materially dependent on technology and rely more on the expertise and skills of the individuals running the business. The availability of adequate infrastructure is a risk that is always present but due to the nature of the business activities being undertaken (in terms of volume and processes) alternative arrangements can and have easily been implemented. All electronic data is now stored in the cloud. The firm uses Microsoft 365 One Drive with two factor step authentication and all employees have laptops with two factor passwords and pin numbers. IT back up and support arrangements are in place and individuals can work both from home efficiently and in an office environment. Both environments are important to any business strategy going forwards. Hybridan is also monitoring cyber risks with new key processes, and with new systems of reporting and data capture in compliance. Hybridan has implemented a new daily back up system in the financial year under review. |
4.7 Performance and reputational risks |
As with any business, there is performance risk that may also lead to reputational risk. Hybridan is exposed to the reputational risk of lower than expected levels of investment returns that will lead to reduced investor interest and will therefore affect income streams and profitability. Hybridan is a boutique firm and the Managing Partner has close control over ongoing profitability - if it appears that income streams are reduced, action can be taken very quickly to try to mitigate this risk, although in this inflationary environment, with firms tending to gravitate away from "small is beautiful", this becomes harder. It is also hard to cut costs beyond a certain point where a question of being sub scale will pervade the business environment. However, if there is a sustained and material impact on the firm's ability to generate sufficient income and doubts as to whether the business remains a going concern, the ultimate reaction would be to wind down in an orderly fashion. As Hybridan will not have market positions and only books income on a prudent basis, the level of Fixed Overhead Requirement gives the firm three months wind down costs - this is appropriate in the extreme circumstance noted above. Hybridan's Managing Partner keeps a close eye on these wind-up costs and goes through a thorough analysis once a year. |
4.8 Market risks |
Hybridan is exposed to the health of the financial markets and to the AIM market and Aquis exchange, as well as the Standard list of the Main Market that is now in its Transitionary Phase, given the Partnership's reliance on raising equity for companies from institutional investors. This risk is mitigated by the firm's membership of the LSE, which enables it to be a Broker for AIM listed companies, and membership of Aquis as a Corporate Adviser to Aquis companies and build retainer income on that basis. As a minimum market capitalisation has now been brought into the Main Market, and the Main Market has undergone a review which will see the Standard list disappear as Standard list companies have been placed in a Transitional Segment, and with AIM experiencing lower levels of business and Aquis suffering from liquidity issues of companies on its market, the listed landscape is getting harder still to navigate. |
Given the firm's simplicity and the diversity of expertise of the Managing Partner and senior staff, a range of mandates can also be secured within the M&A and private company advisory and consultancy areas. Regulation affects the Partnership's and the Partnership's clients' businesses and there is still a lot of it that everyone has had to get to grips with. Hybridan has taken a market wide view regardless of AIM, the Main market or Aquis in terms of retained clients and fundraising. |
Hybridan has in this financial year under review decided not to take on any further UK listed but non UK domiciled business for a number of reasons, primarily that these types of businesses do not align with the Managing Partner's wider ambitions to support and grow the UK economy with its small input as an organisation into the SME landscape of companies. |
4.9 Risk Appetite |
Hybridan's risk appetite is low. Hybridan does not take principal positions and manages the risks outlined above to mitigate as much risk as possible. |
4.10 Other risks |
The government work-based pension's scheme is working well at Hybridan. Hybridan retains consultants to manage the scheme for itself to reduce the risks associated with getting a date or detail incorrect. |
There is no concentration risk exposure. |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
5. SUMMARY PILLAR 1 AND PILLAR 2 CALCULATIONS |
Hybridan LLP: Summary capital position as reported to the FCA at 31st March 2024: |
Pillar 1 | ICAAP |
Minimum capital (£'000) | Pillar 2 Capital (£'000) |
Base requirement | 75 | n/a |
Credit risk | 0 | 0 |
Market risk | 0 | 0 |
Operational risk | n/a | 0 |
Fixed overhead requirement (FOR) | 82 | n/a |
Pillar 1 total | 82 | n/a |
Pillar 2 operational risk | n/a | n/a |
Pillar 2 business risk | n/a | n/a |
Pillar 2 legal and reputational risk | n/a | n/a |
Additional capital to cover stress testing / scenario analysis (see later section) |
n/a |
- |
ICAAP capital requirement | 82 | 82 |
Capital resources | 1,355 | 1,355 |
Surplus (= total capital less ICAAP capital) |
1,273 |
1,273 |
STATEMENT OF MEMBERS' RESPONSIBILITIES |
The members are responsible for preparing the Report of the Members and the financial statements in accordance with applicable law and regulations. |
Legislation applicable to limited liability partnerships requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under legislation applicable to limited liability partnerships the members must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the LLP and of the profit or loss of the LLP for that period. In preparing these financial statements, the members are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the LLP will continue in business. |
The members are responsible for keeping adequate accounting records that are sufficient to show and explain the LLP's transactions and disclose with reasonable accuracy at any time the financial position of the LLP and enable them to ensure that the financial statements comply with the Companies Act 2006 as applied to LLPs by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. They are also responsible for safeguarding the assets of the LLP and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the members are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the LLP's auditors are unaware, and each member has taken all the steps that he or she ought to have taken as a member in order to make himself or herself aware of any relevant audit information and to establish that the LLP's auditors are aware of that information. |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Report of the Members |
FOR THE YEAR ENDED 31 MARCH 2024 |
AUDITORS |
The auditors, Barber & Company (Statutory Auditors), will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE MEMBERS: |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Statement of Financial Position |
31 MARCH 2024 |
31.3.24 | 31.3.23 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Property, plant and equipment | 4 |
CURRENT ASSETS |
Debtors | 5 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 6 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
and |
NET ASSETS ATTRIBUTABLE TO MEMBERS |
1,333,601 |
1,593,470 |
LOANS AND OTHER DEBTS DUE TO MEMBERS |
8 |
1,261,601 |
1,521,470 |
MEMBERS' OTHER INTERESTS |
Capital accounts | 72,000 | 72,000 |
1,333,601 | 1,593,470 |
TOTAL MEMBERS' INTERESTS |
Loans and other debts due to members | 8 | 1,261,601 | 1,521,470 |
Members' other interests | 72,000 | 72,000 |
1,333,601 | 1,593,470 |
In accordance with Section 444 of the Companies Act 2006 as applied to LLPs by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008, the Statement of Comprehensive Income has not been delivered. |
The financial statements were approved by the members of the LLP and authorised for issue on |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Notes to the Financial Statements |
FOR THE YEAR ENDED 31 MARCH 2024 |
1. | STATUTORY INFORMATION |
Hybridan LLP is registered in England and Wales. The LLP's registered number and registered office address can be found on the General Information page. |
The presentation currency of the financial statements is the Pound Sterling (£). |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Turnover |
Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
Tangible fixed assets |
Fixtures and fittings | - |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. The Members note that there are no forex bank accounts. |
3. | EMPLOYEE INFORMATION |
The average number of employees during the year was |
4. | PROPERTY, PLANT AND EQUIPMENT |
Fixtures |
and |
fittings |
£ |
COST |
At 1 April 2023 |
Additions |
At 31 March 2024 |
DEPRECIATION |
At 1 April 2023 |
Charge for year |
At 31 March 2024 |
NET BOOK VALUE |
At 31 March 2024 |
At 31 March 2023 |
HYBRIDAN LLP (REGISTERED NUMBER: OC325178) |
Notes to the Financial Statements - continued |
FOR THE YEAR ENDED 31 MARCH 2024 |
5. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.3.24 | 31.3.23 |
£ | £ |
Trade debtors |
Other debtors |
Prepayments and accrued income |
6. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.3.24 | 31.3.23 |
£ | £ |
Trade creditors |
Social security and other taxes |
Other creditors |
Accruals and deferred income |
7. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
31.3.24 | 31.3.23 |
£ | £ |
Within one year |
8. | LOANS AND OTHER DEBTS DUE TO MEMBERS |
Loans and other debts due to members represent allocated profits not yet paid to members and rank equally with unsecured creditors in the event of a winding up. |
9. | DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006 |
The Report of the Auditors was unqualified. |
for and on behalf of |
10. | ULTIMATE CONTROLLING PARTY |
The controlling party is Ms C L Noyce. |