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RNS
Numis Corporation PLC  -  NUM   

Half-year Results

Released 07:00 08-May-2017

RNS Number : 3910E
Numis Corporation PLC
08 May 2017
 

Numis Corporation Plc

Half Year Results

for the six months ended 31 March 2017

 

London, 8 May 2017: Numis Corporation Plc ("Numis") today announces unaudited results for the six months ended 31 March 2017. Numis is the holding company of Numis Securities Limited, the independent corporate advisory and stockbroking business (the "Group").

 

Highlights

 

 

H1 2017

H1 2016

Change

 

Revenue

 

£52.4m

 

£56.8m

 

-8%

 

Total income

 

£53.8m

 

£56.9m

 

-5%

 

Profit before tax

 

£10.5m

 

£16.8m

 

-38%

 

Earnings per share

 

8.0p

 

12.2p

 

-34%

 

Interim dividend

 

5.5p

 

5.5p

 

Flat

 

Cash balances

 

£71.2m

 

£72.0m

 

-1%

 

Net assets

 

£130.7m

 

£116.5m

 

+12%

 

 

·          Revenue down 8% to £52.4m, against record high revenues recorded in the comparative prior period.  Within this, we saw growth in Equities revenue up 31% to £23.4m offset by a decrease in Corporate Broking and Advisory ("CB&A") revenue which was down 26% to £29.0m.  Overall staff numbers were largely unchanged and we believe our revenue per head remains favourable when compared to industry peers.    

 

·          Profit before tax down 38% to £10.5m, which includes £1.4m of net gains on our strategic investment portfolio.     

 

·          We ended the period with cash balances of £71.2m (2016: £72.0m) and net assets of £130.7m (2016: £116.5m).  Lower revenues during the first half of 2017 combined with higher outflows in respect of seasonal expenses resulted in a small net operational cash outflow during the period.  Cash outflows in respect of dividend payments and share repurchases during the period totalled £12.6m (H1 16: £9.0m). This combined cash outflow to shareholders is at its highest in the Group's history for a half year period.

 

·          The Board has approved an unchanged interim dividend of 5.50p (2016: 5.50p).

 

·          The strong revenue performance within Equities matched the highest level recorded by the Group for a half year period and was driven by our continued focus on offering best-in-class research, sales and execution services. This was recognised in the Thomson Reuters Extel survey, in which we were ranked No 1 UK Small & Mid Cap Brokerage Firm for the 4th year in a row during 2016.  

 

 

·          The performance within CB&A reflects a scarcity of primary equity issuance in the UK market as a whole.  We completed 2 IPOs during the period compared to 10 in the first half of last year. However, we also experienced higher transaction volumes in non-primary activity reflecting the quality and breadth of our client base. During the period we carried out 2 IPOs, 18 secondary fund raises, 17  advisory mandates primarily in M&A and 9 block trades and secondary sell-downs.

 

·          On 21 March 2017, Alan Carruthers succeeded Gerald Corbett as Non-Executive Chairman. We are delighted to welcome Alan and feel certain that he will make a significant contribution to the continued development and success of Numis.  

 

·              Trading in the second half has started very well, with the completion of 10 corporate transactions generating over £10m of fees and a continuation of the high levels of revenue seen within our Equities division. When coupled with our deal pipeline, this gives us confidence that the business will have a satisfactory outcome for the full year.

 

 

Alex Ham and Ross Mitchinson, Co-Chief Executive Officers, said:

 

"Numis delivered a creditable performance when viewed against record revenue generation in the comparable prior period and muted primary issuance market-wide. The business remains focussed on servicing its high quality corporate client base whilst, at the same time, expanding the franchise into supporting unquoted as well as quoted companies.   

 

We believe our ability to nurture relationships with entrepreneurs and business leaders ranging from first fund-raisers through to stock market IPO candidates and into FTSE 100 market leaders gives us a unique insight into the UK's most exciting businesses.  When coupled with the strong relationships we enjoy with our institutional clients, this provides an excellent platform from which to further develop and build the business."

 

Contacts:

Numis Corporation:               

Alex Ham & Ross Mitchinson, Co-Chief Executives                   020 7260 1245

Simon Denyer, Group Finance Director                                       020 7260 1225

 

Brunswick:

Gill Ackers                                                                                020 7404 5959

Simone Selzer                                                                           020 7404 5959

 

Grant Thornton UK LLP (Nominated Adviser):
Philip Secrett                                                                             020 7728 2578
Harrison J Clarke                                                                      020 7184 4384 

 

Notes for Editors

 

Numis is a leading independent corporate advisory and stockbroking group offering a full range of research, execution, corporate broking and advisory services to companies in the UK and their investors. 

 

Alan Carruthers was appointed non-executive chairman of Numis on 21 March 2017. The details regarding his appointment are contained in our market announcement made on that date.   

 

 

 

 

Review of Performance

 

Overall Performance

We are pleased to report that the business has delivered a creditable performance during the six months ended 31 March 2017 against a mixed market backdrop and record levels of income recorded in the comparative prior period. During the six months ended 31 March 2017, total income decreased by 5% to £53.8m (2016: £56.9m) and profit before tax decreased by 38% to £10.5m (2016: £16.8m).  Profit before tax includes £1.4m of net gains recognised on investments held outside of our market making business (2016: £0.2m).  Our balance sheet remains strong with cash balances totalling £71.2m (2016: £72.0m) while net assets have increased to £130.7m (2016: £116.5m).  

 

 

Market Conditions

For the period from 1 October 2016 to 31 March 2017, all major UK equity indices recorded growth of 6% or more with the small cap sector approaching double-digit growth. Much of this performance was evenly spread across the period as the markets consolidated their view on Brexit and the US Presidential election result. During the period, the Numis Smaller Companies Index generated returns of +10.3%, and the Numis UK Mid Cap Index +7.7%, reflecting the relatively strong performance of this sector of the market.

 

For the market as a whole, the value of secondary trading on the London Stock Exchange has shown an improvement on the comparable six month period. However, equity issuance across the market has not experienced any appreciable upturn, with equity funds raised on AIM and the Main Market combined totalling £13.6bn, down 1% versus the comparable prior period. M&A activity across the market has also been muted although, as we are seeing within our own client base, the continued relative weakness of sterling combined with increasing availability of cheap finance is beginning to fuel M&A activity.

 

 

Corporate Broking & Advisory ("CB&A")

We believe in building long-term relationships with our corporate clients, endeavouring to provide them with service of exceptional quality, which is tailored to their needs. We pride ourselves on the strength of these relationships, which we believe is reflected in the momentum that we enjoy both in client numbers, as well as longevity of relationship and in fee generation over time.

 

Revenue from CB&A activities for the period totalled £29.0m (2016: £38.9m).  We have seen a scarcity of primary equity issuance in the UK market as a whole and M&A activity has yet to fully benefit our top line.  Whilst we are not immune to such conditions, our corporate division has experienced higher transaction volumes in non-primary activity than the same period last year, reflecting the quality of our client base. During the period we carried out 2 IPOs, 18 secondary fund raises, 17 advisory mandates primarily in M&A and 9 block trades and secondary sell-downs.  Our market share of UK ECM activity remains intact and we are ranked 4th in the UK ECM league tables for the six month period ending 31 March 2017.

 

We continue to attract high quality corporate clients in order to offset inevitable departures resulting from M&A and ended the period with 199 companies for whom we act as broker. The market capitalisation of our client list now averages around £637m, but it is important to note that the median is £276m and we remain as committed as ever to the small cap space. This is reflected in our wins during the period, which have included businesses from £48m market cap to well over £1bn market cap. We remain ranked #2 Broker and #2 Adviser overall by total number of stock market clients as per the most recent Corporate Advisers Rankings Guide.

 

Notable deals completed during the period included IPOs for Luceco and Premier Asset Management and a number of secondary raises for our corporate clients including INPP, Learning Technologies Group, Bluefield Solar Income Fund and John Menzies. In addition, we raised £150m through a private placement for Accelerated Digital Ventures and now act as financial advisor to two unquoted companies. In total, we raised £0.7bn of equity capital during the period (2016: £1.2bn).

 

Building our corporate advisory capabilities remains a major area of focus. We completed 17 pure advisory roles during the period including the acquisition by the McColl's Retail Group of 298 stores from the Co-operative Group, John Menzies acquisition of ASIG and the recommended offer by Madison Dearbom Partners for Powerflute.

 

We have also built up a strong track record in the successful execution of block trades and secondary sell downs.  During the period, we executed 9 such transactions with an aggregate value of £1.1bn.  We continue to develop our ability to conduct private placements. There is an ever deeper and more developed pool of capital that is happy to own unlisted securities, and often private companies want to access this capital without going through an IPO. In November we took part in a £150m private placement in Accelerated Digital Ventures and helped to raise money privately for Oxford Science & Innovation. This is an exciting growth area, which plays well to our strengths in matching up UK growth companies with sophisticated and long-term investors. Our Venture Broking team spend a significant amount of time and energy filtering those private companies, and we continue to expand our network of investors in this space as well as the resource that we devote to those opportunities.

 

 

Equities

High quality research and sales is at the heart of our Equities business. It creates relationships based on trust with our institutional clients and is at the core of our powerful international distribution capability. Our sector analysts cover approximately 370 companies across 16 sectors, whilst our Investment Funds research team covers around 400 investment companies and funds. Our highly regarded sales team provides a service to more than 440 active institutional clients across the UK, Europe, the Americas and Australia. Data from Starmine and the various alpha capture systems continue to demonstrate the very impressive value we add to our institutional clients.

 

Our US office continues to provide a best-in-class service in marketing UK equities to major North American institutional investors, including managing a significant number of roadshows and reverse roadshows. Our distribution offering also extends to the Private Client Fund Managers ("PCFM") through our PCFM team, who access a network of over 3,000 active fund managers at 200 PCFM houses in the UK, who collectively can be a very powerful pool of liquidity. 

 

We provide execution services in over 670 stocks, of which over 500 are listed on the Main Market of the London Stock Exchange. During the period we had #1 market share in 129 stocks (FY 2016: 127) across these markets, and were a top 3 provider in a further 80 stocks (FY 2016: 92). With access to multiple trading venues and liquidity providers, we are able to deliver an exceptionally strong execution capability to our institutional clients. 

 

Combined institutional commission & trading revenues for the period were impressive, totalling £23.4m (2016: £17.8m), an increase of 31%, and matched the highest level recorded by the Group for a half year period. Whilst there was an overall increase in market volume and value traded, we continue to gain market share of direct customer business and to prosper despite the rise of electronic trading systems and dark pools of liquidity.

 

Our well-resourced market-making and sales-trading teams ensure that we are very well placed to source liquidity on behalf of our institutional clients, which often requires skill and human effort that cannot be found in a dark pool or standalone electronic trading venue. The growth in institutional commissions was achieved despite the changes to the institutional broker payment model as they look to embrace MiFID II, which is due to be implemented in January 2018.  Our trading revenues saw a healthy increase and were achieved on moderately lower levels of capital usage.

 

 

Costs and People

Administrative expenses for the period totalled £43.3m (2016: £40.4m). Compensation costs as a percentage of revenue have increased to 58% (2016: 50%).  This is wholly attributable to an increase in share award related charges which, in part, reflects the increase in the Company's share price over the six month period ending 31 March 2017. Despite this, compensation costs are marginally below that recorded in the second half of 2016.

 

Non-compensation costs comprise expenses incurred in the normal course of business, the most significant of which relate to technology, information systems, market data, brokerage, clearing and exchange fees and occupancy.  The current non-compensation cost run-rate is 3% above that seen in the second half of 2016 and is likely to experience upward pressure as we increasingly commit resource to the implementation of MiFID II amongst other regulatory and business initiatives.

 

Average headcount remained stable at 214 (2016: 213) and we ended the period with a headcount of 217 (end 2016: 220). 

The calibre and dedication of our people was instrumental in Numis being voted #1 UK Small & Mid Cap Brokerage Firm by both companies and institutions for the fourth year in succession in the 2016 Thomson Reuters Extel Survey.

 

 

Strategic Investments

The value of our strategic investments total £32.3m (30 September 2016: £29.8m). Of this value, £17.1m is in quoted and fairly liquid securities, whilst £15.2m is invested in unquoted securities. The movement during the period reflects new investments and follow-on funding totalling £1.3m coupled with £1.2m of net fair value uplifts of which the majority came from our unquoted investments. We continue to believe the majority of these investments are complementary to our existing core business and that they offer an exciting opportunity for the Group to grow its presence in areas in which it has expertise or a relevant network of investors. Going forward, we will explore opportunities for re-cycling the portfolio where we see attractive investment propositions which are strategically relevant. 

 

Financial Position

Our balance sheet strengthened further during the period, with cash balances totalling £71.2m (2016: £72.0m), while net assets have increased to £130.7m (2016: £116.5m).  Cash balances remain broadly unchanged to those reported at 31 March 2016 but are down £17.8m on that reported as at 30 September 2016.  The cash used in operating activities during the six months ended 31 March 2017 reflects the lower operational inflows, principally due to lower cash-based revenues, combined with outflows in respect of seasonal expense items which fall within the first half of our financial year and an increase in the cash margin placed in respect of secondary trading activity.

  

We have been able to maintain dividend distributions (£7.3m cash outflow) in addition to the repurchase of shares into Treasury and the Employee Benefit Trust (£5.3m cash outflow) during the period. This combined cash outflow to shareholders is at its highest in the Group's history for a half year period and, in respect of the buy-back activity, compares to a £6.7m spend during the whole of our 2016 financial year.

 

 

Board Changes

On 21 March 2017, the Company announced the appointment of Alan Carruthers as Non-Executive Chairman.  Alan replaced Gerald Corbett who stepped down from the Board on the same date.  We are delighted to welcome Alan and feel certain that he will make a significant contribution to the continued development and success of Numis.   

 

 

Dividend

The Board has approved the payment of an interim dividend of 5.50p per share (2016: interim 5.50p per share, 2016 total:  12.00p per share). This dividend will be payable on 23 June 2017 to shareholders on the register of members at the close of business on 19 May 2017.  Shareholders have the option to elect to use their cash dividend to buy additional shares in Numis through a Dividend Re-Investment Plan (DRIP).

 

 

Current Trading and Outlook

Our second half has started very well with the completion of 10 fund raises generating fees of over £10m.  Equities revenues continue to run at the high levels seen in the first half.  The recent call for a general election in the UK during the summer as well as geo-political events further afield will undoubtedly cause an element of uncertainty. 

 

We will continue to focus our efforts on providing high quality independent advice to our clients.  We have a robust balance sheet, a quality corporate client base and a strong deal pipeline all of which positions Numis well to enjoy future success and gives us confidence that the business will have a satisfactory outcome for the full year.

 

 

Alex Ham & Ross Mitchinson

Co-Chief Executives

8 May 2017

 

 

 

 

 

 

 

Consolidated Income Statement

UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2017

 

 

 

6 months ended

6 months ended

Year ended

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

      Unaudited

Unaudited

Audited

 

Notes

        £'000

£'000

        £'000

Revenue

3

52,388

56,769

112,335 

 

 

 

 

 

Other operating income

4

1,441

156

3,759

Total income

 

53,829

56,925

116,094

Administrative expenses

5

(43,340)

(40,353)

(83,600)

Operating profit

 

10,489

16,572

32,494

 

 

 

 

 

 

 

 

 

 

Finance income

6

179

224

427

Finance costs

6

 (203)

 (31)

(390)

Profit before tax

 

10,465

16,765

32,531

 

 

 

 

 

Taxation 

 

(1,636)

(3,093)

(6,132)

 

 

 

 

 

 

Profit after tax

 

8,829

13,672

26,399

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the parent

 

8,829

13,672

26,399

 

 

 

 

 

Earnings per share

7

 

 

 

   Basic

 

8.0p

12.2p

23.5p

   Diluted

 

7.6p

11.6p

22.4p

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2017

 

 

 

6 months ended

6 months ended

Year ended

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

      Unaudited

Unaudited

Audited

 

 

        £'000

£'000

        £'000

Profit for the period

 

8,829

13,672

26,399

 

 

 

 

 

Exchange differences on translation of foreign operations

 

11

174

630

Other comprehensive income for the period, net of tax

 

11

174

630

 

 

 

 

 

Total comprehensive income for the period, net of tax, attributable to the owners of the parent

 

8,840

13,846

27,029

 

 

 

 

 

 

Consolidated Balance Sheet

UNAUDITED AS AT 31 MARCH 2017

 

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

Unaudited

Unaudited

Audited

 

Notes

£'000

£'000

£'000

Non-current assets

 

 

 

 

Property, plant and equipment

9a

3,479

4,118

3,734

Intangible assets

 

78

178

122

Deferred tax

9b

2,502

1,923

1,666

 

 

6,059

6,219

5,522

Current assets

 

 

 

 

Trade and other receivables

9c

272,151

179,680

170,490

Trading investments

9d

49,003

46,075

48,453

Stock borrowing collateral

9e

11,154

4,041

3,901

Derivative financial instruments

 

682

709

616

Cash and cash equivalents

9g

71,199

71,990

89,002

 

 

404,189

302,495

312,462

Current liabilities

 

 

 

 

Trade and other payables

9c

(259,720)

(178,449)

(173,031)

Financial liabilities

9f

(17,606)

(10,567)

(12,293)

Current income tax

 

(2,198)

(3,171)

(3,571)

 

 

(279,524)

(192,187)

(188,895)

 

 

 

 

 

Net current assets

 

124,665

110,308

123,567

 

 

 

 

 

 

Non current liabilities

 

 

 

 

Deferred tax

9b

(11)

(4)

(12)

 

 

 

 

 

 

 

 

 

 

Net assets

 

130,713

116,523

129,077

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

5,922

5,922

5,922

Share premium

 

38,854

38,854

38,854

Other reserves

 

10,183

6,611

8,238

Retained earnings

 

75,754

65,136

76,063

 

 

 

 

 

Total equity

 

130,713

116,523

129,077

 

 

 

 

Consolidated Statement of Changes in Equity

UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2017

 

 

 

Share capital

£'000

Share premium £'000

Other reserves £'000

Retained earnings £'000

Total

£'000

Balance at 1 October 2015

 

          5,922

        38,854

             5,631

      65,112

115,519

 

Profit for the period

 

              

          

 

13,672

13,672

Other comprehensive income

 

              

          

174

-

174

Total comprehensive income for the period

 

 

 

174

13,672

13,846

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

(12,861)   

(12,861)

Movement in respect of employee share plans

 

 

 

806

1,230

2,036

Deferred tax related to share based payments

 

 

 

 

(158)

(158)

Net movement in Treasury shares

 

 

 

 

(1,859)

(1,859)

Transactions with shareholders

 

-

-

806

(13,648)

(12,842)

 

 

 

 

 

 

 

Balance at 31 March 2016

 

5,922

38,854

6,611

65,136

116,523

 

Balance at 1 October 2015

 

5,922

38,854

5,631

65,112

115,519

 

Profit for the year

 

              

          

 

26,399

26,399

Other comprehensive income

 

              

          

630

-

630

Total comprehensive income for the year

 

 

 

630

26,399

27,029

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

(12,861)

(12,861)

Movement in respect of employee share plans

 

 

 

 

1,470

1,470

Deferred tax related to share based payments

 

 

 

1,977

(3,559)

(1,582)

Net movement in Treasury shares

 

 

 

 

(498)

(498)

Transactions with shareholders

 

 

 

1,977

(15,448)

(13,471)

 

 

 

 

 

 

 

Balance at 30 September 2016

 

5,922

38,854

8,238

76,063

129,077

 

Balance at 1 October 2016

 

          5,922

        38,854

             8,238

      76,063

129,077

 

Profit for the period

 

              

          

 

8,829

8,829

Other comprehensive income

 

              

          

11

-

11

Total comprehensive income for the period

 

 

 

11

8,829

8,840

 

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

(7,307)   

(7,307)

Movement in respect of employee share plans

 

 

 

1,934

(1,199)

735

Deferred tax related to share based payments

 

 

 

 

271

271

Net movement in Treasury shares

 

 

 

 

(903)

(903)

Transactions with shareholders

 

-

-

1,934

(9,138)

(7,204)

 

 

 

 

 

 

 

Balance at 31 March 2017

 

5,922

38,854

10,183

75,754

130,713

 

 

 

 

Consolidated Statement of Cash Flows

UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2017

 

 

 

6 months ended

6 months ended

Year ended

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

Unaudited

Unaudited

Audited

 

Notes

£'000

£'000

£'000

Cash (used in)/from operating activities

10

(1,217)

23,139

53,398

Interest paid

 

(34)

(2)

(182)

Taxation paid

 

(3,576)

(1,768)

(4,481)

Net cash (used in)/from operating activities

 

(4,827)

21,369

48,735

 

 

 

 

 

Investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(344)

(174)

(346)

Purchase of intangible assets

 

-

-

-

Interest received

 

179

219

430

Net cash (used in)/from investing activities

 

(165)

45

84

 

 

 

 

 

Financing activities

 

 

 

 

Purchase of own shares - Employee Benefit Trust

 

(2,114)

(410)

(3,000)

Purchase of own shares - Treasury

 

(3,215)

(1,859)

(3,719)

Dividends paid

 

(7,307)

(6,713)

(12,861)

Net cash used in financing activities

 

(12,636)

(8,982)

(19,580)

 

 

 

 

 

Net movement in cash and cash equivalents

 

(17,628)

12,432

29,239

 

 

 

 

 

Opening cash and cash equivalents

 

89,002

59,591

59,591

Net movement in cash and cash equivalents

 

(17,628)

12,432

29,239

Exchange movements

 

(175)

(33)

172

Closing cash and cash equivalents

 

71,199

71,990

 

89,002

 

 

 

 

Notes to the Financial Statements

 

1.      Basis of preparation

 

Numis Corporation Plc is a UK AIM traded company incorporated and domiciled in the United Kingdom. The address of its registered office is 10 Paternoster Square, London, EC4M 7LT.  The Company is incorporated in the United Kingdom under the Companies Act 2006 (company registration No. 2375296).

 

The consolidated financial information contained within these financial statements is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. These financial statements have been prepared in accordance with AIM Rule 18. The statutory accounts for the year ended 30 September 2016, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and in accordance with International Financial Reporting Interpretations Committee (IFRIC) interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies.  The report of the independent auditor on those statutory accounts contained no qualification or statement under Section 498(2) or (3) of the Companies Act 2006.

 

The preparation of these interim financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The judgements and estimates applied by the Group in these interim financial statements have been applied on a consistent basis with the statutory accounts for the year ended 30 September 2016.  Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.

 

These interim financial statements are prepared on the historical cost basis, except for the revaluation of certain financial instruments.

 

These interim financial statements are prepared on a going concern basis as the directors have satisfied themselves that, at the time of approving these interim financial statements, the Group has adequate resources to continue in operational existence for at least the next twelve months.

 

During the period, a number of amendments to IFRS became effective and were adopted by the Company and the Group.  None of these amendments have a material impact on the Group's income statement, statement of comprehensive income, balance sheet, statement of changes in equity or statement of cash flows.

   

 

2.     Segmental reporting

 

Geographical information

The Group is managed as an integrated corporate advisory and stockbroking business and although there are different revenue types (which are separately disclosed in note 3) the nature of the Group's activities is considered to be subject to the same and/or similar economic characteristics.  Consequently the Group is managed as a single business unit.

 

The Group earns its revenue in the following geographical locations:

 

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

United Kingdom

47,778

51,670

102,684

United States of America

4,610

5,099

9,651

 

52,388

56,769

112,335

 

The following is an analysis of the carrying amount of non-current assets (excluding financial instruments and deferred tax assets) by the geographical area in which the assets are located:

 

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

United Kingdom

3,482

4,160

3,744

United States of America

75

136

112

 

3,557

4,296

3,856

 

Other information

In addition, the analysis below sets out the income performance and net asset split between our core corporate advisory and stockbroking business and the small number of equity holdings which constitute our investment portfolio. 

 

 

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Net institutional income

23,433

17,832

38,419

Total corporate transaction revenues

23,340

34,446

64,293

Corporate retainers

5,615

4,491

9,623

Revenue (see note 3)

52,388

56,769

112,335

 

 

 

 

Investment activity net gains

1,441

156

3,759

Contribution from investment portfolio

1,441

156

3,759

Total income

53,829

56,925

116,094

 

 

 

Net assets

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

 

 

 

 

Corporate advisory & broking

27,262

19,128

10,243

Investing activities

32,252

25,405

29,832

Cash and cash equivalents

71,199

71,990

89,002

 

Total net assets

130,713

116,523

129,077

 

 

 

 

 

3.     Revenue

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Net trading gains

4,997

1,780

6,496

Institutional commissions

18,436

16,052

31,923

Net institutional income (Equities)

23,433

17,832

38,419

 

Corporate retainers

5,615

4,491

9,623

Advisory fees

6,890

8,514

16,261

Placing commissions

16,450

25,932

48,032

Net corporate income (CB&A)

28,955

38,937

73,916

 

52,388

56,769

112,335

 

 

4.      Other operating income

Other operating income represents net gains made on investments which are held outside of the market making portfolio. The gains reflect price movements on quoted holdings, fair value adjustments on unquoted holdings and related dividend income. Broadly, half of the net gains recorded in the current period result from fair value adjustments on unquoted holdings.   

 

 

5.     Administrative expenses

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Staff costs

30,254

28,281

58,882

Non-staff costs

13,086

12,072

24,718

 

43,340

40,353

83,600

 

The average number of employees during the period has increased marginally to 214 (H1 2016: 213).  Staff costs excluding share award related charges have reduced by 6% compared to the prior period.  However, an increase in the Company's share price between 30 September 2016 and 31 March 2017 (219.0p to 246.5p) combined with the granting of performance based share awards within the last seven months has resulted in an overall increase in staff costs versus H1 2016.  Despite this, staff costs are marginally below that recorded for H2 2016.  

 

The major components of non-staff costs comprise our technology platform, premises costs and expenses incurred through brokerage, clearing and exchange fees. Certain elements within non-staff costs increase with activity levels, particularly brokerage, clearing and exchange fees which account for almost half of the increase seen versus the prior period.  This is in-line with the 15% increase seen in institutional commission over the same period.  The current non-staff cost run-rate is 3% above that seen in H2 2016 and is likely to experience upward pressure as we increasingly commit resource to the implementation of MiFD II amongst other regulatory and business initiatives.

 

 

6.     Finance income and Finance costs

 

Finance income for the period:

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Interest income

179

224

427

 

 

 

 

 

Finance costs for the period:

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Net foreign exchange losses

167

24

380

Interest expense

36

7

10

 

203

31

390

 

 

7.     Earnings per share

Basic earnings per share is calculated on profits after tax of £8,829,000 (2016: £13,672,000) and 110,544,897 (2016: 111,887,475) ordinary shares being the weighted average number of ordinary shares in issue during the period. Diluted earnings per share takes account of contingently issuable shares arising from share scheme award arrangements where their impact would be dilutive.  In accordance with IAS 33, potential ordinary shares are only considered dilutive when their conversion would decrease the profit per share or increase the loss per share from continuing operations attributable to the equity holders.  Therefore shares that may be considered dilutive while positive earnings are being reported may not be dilutive while losses are incurred.

 

The calculations exclude shares held by the Employee Benefit Trust on behalf of the Group and shares held in Treasury.

 

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

Number

Number

Number

 

Thousands

Thousands

Thousands

Weighted average number of ordinary shares  in issue during the period - basic

110,545

111,887

112,255

Dilutive effect of share awards

6,184

6,356

5,755

Diluted number of ordinary shares

116,729

118,243

118,010

 

8.     Dividends

 

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Final dividend year ended 30 September 2015 (6.00p)

 

6,713

6,713

Interim dividend year ended 30 September 2016 (5.50p)

 

6,148

6,148

Final dividend year ended 30 September 2016 (6.50p)

7,307

 

 

Distribution to equity holders of Numis Corporation Plc

7,307

12,861

12,861

 

The Board has approved the payment of an interim dividend of 5.50p per share (2016: interim 5.50p per share). This dividend will be payable on 23 June 2017 to shareholders on the register of members at the close of business on 19 May 2017. These financial statements do not reflect this dividend payable.

 

 

 

9.     Balance sheet items

(a)       Property, plant and equipment

The Group's offices in London underwent a program of refurbishment during 2015.  No material additions have been made since then.

 

(b)      Deferred tax

As at 31 March 2017 deferred tax assets totalling £2,502,000 (30 September 2016: £1,666,000) have been recognised reflecting managements' confidence that there will be sufficient levels of future taxable profits against which these deferred tax asset can be utilised. The deferred tax asset principally comprises amounts in respect of unvested share based payments. 

 

(c)       Trade and other receivables and Trade and other payables

Trade and other receivables and trade and other payables principally comprise amounts due from and due to clients, brokers and other counterparties. Such amounts represent unsettled sold and unsettled purchased securities transactions and are stated gross. The magnitude of such balances varies with the level of business being transacted around the reporting date. Included within Trade and other receivables are cash collateral balances held with securities clearing houses of £10,430,000 (30 September 2016: £7,670,000).

 

(d)      Trading investments

Included within trading investments is £32,252,000 (30 September 2016: £29,832,000) of investments held outside of the market making portfolio. The increase during the period is evenly split between net fair value adjustments and additional investments, some of which were follow-on raises.     

 

(e)       Stock borrowing collateral

The Group enters stock borrowing arrangements with certain institutions which are entered into on a collateralised basis with cash advanced as collateral. Under such arrangements a security is purchased with a commitment to return it at a future date at an agreed price. The securities purchased are not recognised on the balance sheet.  Where cash has been used to affect the purchase, an asset is recorded on the balance sheet as stock borrowing collateral at the amount of cash collateral advanced or received.

 

In the rare event that trading investments are pledged as security these remain within trading investments and the value of security pledged disclosed separately except in the case of short-term highly liquid assets with an original maturity of three months or less, which are reported within cash and cash equivalents with the value of security pledged disclosed separately.

 

  

(f)       Financial liabilities

Financial liabilities comprise short positions in quoted securities arising through the normal course of business in facilitating client order flow and form part of the market making portfolio.

 

 

(g)      Cash and cash equivalents

Cash balances are at similar levels to those reported at 31 March 2016.  This has been achieved whilst maintaining dividend distributions (£7.3m cash outflow) and the repurchase of shares into Treasury and the Employee Benefit Trust (£5.3m cash outflow).  This combined cash outflow to shareholders is at its highest in the Group's history for a half year period.

 

 

10.     Reconciliation of profit before tax to cash from operating activities

 

 

6 months ended

6 months ended

Year ended

 

31 March 2017

31 March 2016

30 September 2016

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'000

Profit before tax

10,465

16,765

32,531

Net finance (expense)/income

24

(193)

(37)

Depreciation charge on property, plant and equipment

604

554

1,126

Amortisation charge on intangible assets

44

69

125

Share scheme charges

4,975

2,513

6,229

(Increase)/decrease in current asset trading investments

(550)

11,546

9,168

Increase in trade and other receivables

(101,665)

(19,183)

(10,476)

Net movement in stock borrowing

(7,253)

(3,219)

(3,079)

Increase in trade and other payables

92,205

14,313

17,744

(Increase)/decrease in derivatives

(66)

(26)

67

 

 

 

 

Cash (used in)/from operating activities

(1,217)

23,139

53,398

 

The cash used in operating activities during the six months ended 31 March 2017 reflects the lower operational inflows, principally due to lower cash-based revenues, combined with outflows in respect of seasonal expense items which fall within the first half of our financial year and an increase in the cash margin placed in respect of secondary trading activity directed through the London Clearing House.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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