19/20 Annual Report
CEO Executive Statement
I am pleased to present my Chief Executive report for the year ended 30 June 2020.
As we all know, the first six months of 2020 were extraordinarily turbulent on both a global and sector basis which resulted in extreme volatility in the oil and gas markets. As Onyx's CEO, I am very proud of the steps the Company and employees have taken which have enabled us to thrive during this period and which leave us ideally positioned for future growth and profitability.
During these challenging times, I would like to reiterate that my primary concern is the safety of all the Company's stakeholders and employees. I truly hope for good health for all.
The financial year under review was characterised by further strong growth in the Group's underlying trading business in parallel with the implementation of our ambitious strategic plan.
Business performance continued to be very strong, with pre-tax profits for the year of £51,623,228 (2019: £11,766,146) an increase of over 300% on the prior year, and well ahead of our most optimistic expectations. This exceptional performance was largely down to our trading performance as we capitalised on the favourable market conditions but I am not only delighted by our financial results but also by the manner in which we achieved this success.
During this very challenging period, and in spite of the national lock down and work from home guidance from the UK government, we continued operating without any meaningful disruption to our business. We were also able to continue our recruitment and training programs that saw the trading team bolstered with new recruits, and we launched our new brokerage business with the addition of further experienced professionals to our team. The fact that we were able to achieve all this demonstrates the maturity of our business and is testament to the hard-work and professionalism of our people.
Our trading revenues were generated by our six diversified, individually profitable, trading desks, with five achieving their best annual results to date. There were meaningful contributions from a number of traders at varying experience levels, with the performances from staff under the Trader Development Program leading to the progression of three traders to Senior Trader level and a further three to Trader level. This brings validation to our internal trading program that will be the backbone to sustainable trading profits for the long-term future, whilst providing the foundations for the next generation to lead the trading floor. Additionally, our internal risk management framework was really put to the test by the extreme volatility we experienced and I was delighted by how it functioned, evidenced by no losses or downside volatility.
On the Services side, we are excited to see the beginnings of an established revenue stream from among the existing business lines within Onyx Capital Advisory, as well as a new brokerage service which was successfully launched in a cost-effective and methodical manner.
The brokerage business was launched with a comparable approach to our junior training process in the trading business, with a formal structured programme incorporating our proprietary information and expertise into oil derivative flow and pricing dynamics. We have set the team up for success with the training of brokers to understand hedging structures, optimising execution and a service approach designed through the feedback of trader and broker interaction we have seen over the years. The brokerage is fully registered and approved by the Financial Conduct Authority to advise clients as well as act as an intermediary, giving it a unique position in the oil derivatives market.
I am looking forward to seeing the continued progress of these businesses in the current financial year.
Future Operations and Outlook
Trading in the first quarter of the new financial year has continued to be strong with performance in line with our expectations and showing a continued upward trajectory in the profitability of the business. Our expectations for this financial year are based on what we believe to be the 'normalised' market conditions for trading and are not based on the exceptional 'one-off' results achieved in the year under review due to the extraordinary volatility in our marketplace.
With the expansion of the trading development program, we now have an established team with individuals capable of populating new trading desks that will see us pursue a dominant position in new products which we are not currently trading. Trading desk growth remains the core of our trading growth strategy, whilst we will be looking to reinforce existing desks to ensure their path to maturity is supported. Our goal for the trading desks is to pursue the number one market making role in each market and further cement ourselves as the largest market maker by volume in the oil derivatives market.
Within Onyx Capital Advisory we will be stepping up our investment after continued proof of concept among individual business lines. The next financial year will be focused on building out a Senior Management team among our Research, Consultancy, and Brokerage teams as well as an emphasis on providing each area with the resources it needs to bring the commercial operations to scale.
The introduction of the Brokerage business now gives us the ability to offer "tier one" execution alongside market pricing, therefore providing a synergy for the Hedging, Consultancy and Research services, taking us further towards the ability to offer a 360 solution for those with oil pricing exposures.
Vision and Alignment
We remain dedicated to the long-term vision of establishing Onyx Capital Group into a market leading platform for oil derivatives across trading flows and services.
Through our values of transparency and fairness, we aim to bridge the gap for the wider financial market, corporations, institutions and retail sector through education and disruptive service offerings that will work to democratise, digitise and ultimately scale the oil futures market. Our individual services have already shown a strong proof of concept that we can obtain market share through a competitive advantage, and ultimately, we can provide something the market wants and needs.
The expansion through the trading pipeline, growing of the services and additional operational staff has led to a rapid onboarding of new employees, with employee count doubling during the financial year. It is a key part of my role to ensure the delivery of the plan in a sustainable manner, and I fully appreciate the need to carefully manage this rapid expansion. To that end we will be working with a newly formed project management team for the next financial year as well as targeted Senior Managers to lead each business line, bringing their experience to be accountable for the running of their individual team.
It is also a priority of mine to ensure every single person not only understands Onyx' mission and direction of travel but also their individual role in this journey, as we look to continue our success and ultimately achieve something truly special together.
It remains vital that every employee that joins Onyx does so with the mentality of being part of this vision and buying into and emulating our core values, namely the resilience to compete in one of the most competitive industries in the world, and to have the humility to learn from experiences and the accountability to take ownership of one's involvement in the firm, beyond just their immediate role.
Further, I am delighted to announce that we have now welcomed three staff members into our Equity Partnership. Due to the hard work and commitment over the last two years they have earned equity in the Company with the associated rights including a share in Company profits. We hope this is the first of many such awards as more staff demonstrate their loyalty and dedication to the firm alongside proven, sustainable performance.
I am thrilled with the performance of the whole team throughout what was an exceptionally challenging period. For the Group to have performed as well as it did is a stunning result and one in which everybody can be proud.
There is an incredible feel to the Company and it is a pleasure to be a part of something with such a ground-breaking vision and to work with a team who I genuinely believe have the character, creativity, ability and professionalism to deliver on all our stated objectives.
We continue to push forward with our ambitious growth plans safe in the knowledge that we have the proven resilience and the maturity to enable us to manage any headwinds that might come our way in the coming months.
Greg Newman - CEO - Onyx Capital Group
View our full results at Companies House
View our 2018/19 Annual Report