TIDMNUM
RNS Number : 8469X
Numis Corporation PLC
07 May 2021
Numis Corporation Plc
Half Year Results
for the six months ended 31 March 2021
London, 7 May 2021 Numis Corporation Plc ("Numis", "Group" or
"Company") today announces unaudited interim results for the period
ended 31 March 2021.
Highlights
-- Strong performance across all business areas delivering a
record half year revenue performance
-- Recovery in UK equity markets and improved investor sentiment
provided a favourable market backdrop
-- Investment Banking revenues more than doubled to GBP82m
-- Further strategic progress in building Advisory and Growth Capital Solutions revenues
-- Equities revenue increased 27% due to consistently strong
trading gains and further market share gains with institutional
clients
-- Dividend maintained at 5.5p in line with policy and GBP11.5m spent on share repurchases
-- Proposed Dublin office offers strategic opportunity to
leverage Capital Markets capabilities in Europe
Financial highlights H1 2021 H1 2020 Change
------------------------------- ---------- ---------- ----------
Revenue GBP115.4m GBP63.1m 82.9%
------------------------------- ---------- ---------- ----------
Underlying Operating profit GBP38.8m GBP9.1m 325%
------------------------------- ---------- ---------- ----------
Profit before tax GBP39.3m GBP7.3m 442%
------------------------------- ---------- ---------- ----------
EPS 25.7p 5.5p 365%
------------------------------- ---------- ---------- ----------
Cash GBP97.6m GBP95.3m 2.4%
------------------------------- ---------- ---------- ----------
Net assets GBP175.3m GBP136.7m 28.2%
------------------------------- ---------- ---------- ----------
Operating highlights
------------------------------- ---------- ---------- ----------
Corporate clients 185 189 (2.1)%
------------------------------- ---------- ---------- ----------
Average market cap of clients GBP1,341m GBP692m 94%
------------------------------- ---------- ---------- ----------
Revenue per head (annualised) GBP804k GBP449k 79%
------------------------------- ---------- ---------- ----------
Operating margin 33.6% 14.5% +19.1ppts
------------------------------- ---------- ---------- ----------
Spend on share repurchases GBP11.5m GBP5.5m 108%
------------------------------- ---------- ---------- ----------
Notes:
1) Revenue, Underlying Operating profit, Operating margin and
Revenue per head all exclude investment income / losses
2) Diluted EPS
3) H1 2020 corporate clients excludes 20 Natural Resources
clients given the subsequent exit from the sector
Alex Ham and Ross Mitchinson, Co-Chief Executive Officers,
said:
"Our consistent focus on enhancing the firm's capabilities and
strengthening our client relationships has contributed to an
excellent and broad-based first half performance. Over the last 12
months we have generated revenues of more than GBP200m, an outcome
we are particularly proud of given the range of expertise and
advice demanded by our clients during this period. We also
recognise the resilience and dynamism of our colleagues in
achieving this performance in challenging circumstances.
Attracting and developing talent will, as always, remain a
priority for us as we continue to target long term strategic growth
opportunities including the international expansion of our Capital
Markets business.
Whilst in the current environment there remains some short-term
uncertainty, the business has great momentum, and the pipeline is
strong. Execution of our Capital Markets pipeline will be
influenced by equity market conditions but the outlook for the
second half is encouraging."
Contacts:
Numis Corporation:
Alex Ham & Ross Mitchinson, Co-Chief Executive Officers 020 7260 1245
Andrew Holloway, Chief Financial Officer 020 7260 1266
Brunswick:
Nick Cosgrove 020 7404 5959
Simone Selzer 020 7404 5959
Grant Thornton UK LLP (Nominated Adviser):
Philip Secrett 020 7728 2578
Harrison Clarke 020 7184 4384
Notes for Editors
Numis is a leading independent investment banking group offering
a full range of research, execution, corporate broking and advisory
services to companies in the UK and their investors. Numis is
listed on AIM, and employs approximately 290 staff in London and
New York.
The information, statements and opinions contained in this
announcement do not constitute a public offer under any applicable
legislation or an offer to sell or solicit of any offer to buy any
securities or financial instruments or any advice or recommendation
with respect to such securities or other 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.
Forward-looking statements
This announcement contains forward-looking statements.
Forward-looking statements sometimes use words such as 'may',
'will', 'seek', 'continue', 'aim', 'anticipate', 'target',
'projected', 'expect', 'estimate', 'intend', 'plan', 'goal',
'believe', 'achieve' or other words of similar meaning. Such
statements and forecasts involve risk and uncertainty because they
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. 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. Forward-looking statements and forecasts are based on
the Directors' current view and information known to them at the
date of this announcement.
Subject to our obligations under the applicable laws and
regulations of any relevant jurisdiction, in relation to disclosure
and ongoing information, we undertake no obligation to update
publicly or revise 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.
Business review
Numis delivered a record 6 month performance against the
backdrop of a recovery in equity markets which benefitted all areas
of the business. Overall, revenues increased 83% to GBP115.4m
(2020: GBP63.1m) and Underlying Operating profit increased
substantially to GBP38.8m (2020: GBP9.1m) reflecting the positive
effect of operational gearing in the business. Profit before tax
was GBP39.3m representing an increase of more than GBP30m relative
to the comparative period and included GBP2.0m of gains recognised
on investments held outside of our market making business (2020:
GBP1.9m loss). Our balance sheet remains resilient with net assets
of GBP175.3m, and our liquidity position was maintained despite new
office related capital expenditure and higher share repurchase
spend; cash balances were GBP97.6m (2020: GBP95.3m).
Market conditions
The 6 month period to 31 March 2021 featured a strong recovery
in UK equity markets as positive vaccine newsflow supported
consistent gains. In addition, the Brexit deal agreed in December
2020 improved investor sentiment toward the UK. Consequently, the
UK has outperformed a number of other markets over the past 6
months and flows into UK equity funds have improved over the
period. The FTSE 100 and FTSE250 were up 14% and 24% respectively
over the six months, and whilst there has been a divergence in
performance across sectors as a result of the pandemic, the
recovery has been beneficial for our business.
As markets exhibited signs of a sustained recovery, volatility
subsided, and corporate confidence returned, the environment for
capital markets activity improved significantly. In particular this
allowed the IPO market to function effectively and, as a result,
IPO volumes over the past 6 months have been at their strongest
level for many years. Overall, UK ECM volumes were materially ahead
of the comparative period which was adversely impacted by the start
of the pandemic and the pause in deal flow ahead of the UK general
election. In addition, UK M&A volumes have started to recover
driven by both domestic and international buyers identifying
attractive investment opportunities and being able to secure the
necessary financing.
Investment Banking
H1 2021 H1 2020 %
GBPm GBPm Change
--------------------------- ------- ------- -------
Capital Markets 63.3 22.8 177%
--------------------------- ------- ------- -------
Advisory 12.4 7.2 72.0%
--------------------------- ------- ------- -------
Corporate retainers 6.3 6.8 (7.6)%
--------------------------- ------- ------- -------
Investment Banking revenue 82.0 36.9 123%
--------------------------- ------- ------- -------
Investment Banking revenue for the 6 months to 31 March 2021 was
123% higher than the first half of the prior year and 27% higher
than the second half of FY20 which benefitted from a significant
volume of COVID-19 related equity issuance. In comparison with the
strong second half performance of FY20, we delivered an improved
revenue performance across multiple products including IPOs,
M&A, block trades and Growth Capital Solutions which, in
aggregate, more than offset the decline in fund raising activity
for our corporate clients. Whilst we have seen diversification by
product in the period, there have been certain sectors such as
Technology and Digital Consumer which have benefited from an
acceleration of certain trends and therefore experienced higher
activity levels as a result. Our investment in these sectors over
many years, and the strength of our track record, ensured we were
well positioned to benefit from the deal flow.
Both transaction volumes and average deal fees increased
materially over the period. Growth in average deal fee has been a
key feature of revenue growth in recent years and demonstrates the
success of our long-term strategic focus on the corporate client
base, our market position in ECM, and a growing contribution from
Growth Capital Solutions which generally attracts higher fees. In
the recent past around 70% of our deal fee revenue has been sourced
from our retained client base, however for this six month period,
more than 60% of our deal fee revenue is attributable to clients
outside of our retained corporate client base. This reflects the
enhanced reputation of the firm, a broadening range of capabilities
and new international revenue opportunities.
Capital markets revenues almost tripled to GBP63.3m, led by a
strong recovery in IPO volumes. Our consistently strong track
record in mid market ECM enabled the firm to establish a leading
market share in UK IPOs during this period of elevated activity.
Whilst Numis has completed more main market IPOs than any other
Investment Bank over the 6 month period, our focus will remain on
securing leading roles for high quality issuers.
In addition to IPOs, Capital Markets revenues have benefited
from the continued success of Growth Capital Solutions which has
broadened its international network of leading technology
disruptors and global investors. As the private markets continue to
operate efficiently and the size of the market opportunity for us
is growing we are continuing to invest in headcount and expand the
capacity of the team to ensure we remain well positioned to
leverage this trend in global capital markets.
Advisory revenues increased 72% relative to the comparative
period reflecting both a recovery in UK M&A volumes, and our
investment in sector specialisation and M&A execution
capability in recent years. The supportive equity market backdrop
has enabled our corporate clients to increasingly assess M&A
opportunities, as a result we currently have a good pipeline of
M&A mandates across both buy side and sell side which is
encouraging for the second half outlook.
Retainer fee income decreased 8% relative to the comparative
period due to the strategic decision to exit the Natural Resources
sector during FY20 which resulted in a 10% reduction in client
numbers. Excluding the impact of this closure, our client base was
broadly flat for the period with client wins largely offset by
clients lost to takeovers. The outlook for new corporate client
wins is positive given the increased volume of IPOs will generate a
pipeline of new high quality clients which should mitigate the
impact of clients lost due to M&A.
The average market capitalisation of the client base continues
to increase at a higher rate than growth in market indices. The
average market capitalisation of the clients won was again
materially ahead of those lost in the period reflecting our
continued focus on strengthening the corporate client base and
targeting businesses which we believe will be active and offer the
most compelling revenue generating opportunities.
Equities
H1 2021 H1 2020 %
GBPm GBPm change
--------------------- ------- ------- -------
Institutional income 21.9 19.7 11.1%
--------------------- ------- ------- -------
Trading 11.5 6.5 75.7%
--------------------- ------- ------- -------
Equities revenue 33.4 26.2 27.3%
--------------------- ------- ------- -------
Equities delivered growth of 27% relative to the comparative
period which benefitted from the extreme volatility caused by the
start of the pandemic. We have continued to focus on ensuring high
levels of engagement with institutional clients and demonstrating
the value of our experience across research, sales and trading.
During the period we strengthened the equities platform through
a small number of selective hires as we continue to refine our
offering and target further market share gains. The elevated
activity levels across both secondary market volumes and capital
markets presents opportunities for us to differentiate our
comprehensive service which we believe is recognised and valued by
our institutional clients. In addition, the overall strength of the
Equities platform has been critical to our recent success in
winning IPO mandates which contributed to a strong Investment
Banking performance this half.
Institutional income, which comprises execution commission and
payments for research, increased 11% compared to the first half of
the prior year. Electronic trading is progressing in line with our
expectations and continues to make an increasing contribution to
execution revenues with a growing list of clients. As expected,
Brexit has resulted in a reduction in institutional income from EU
based clients. However, this forfeited revenue is not material and
has been more than offset by revenue growth from US based accounts
served by our New York office.
Trading book limits were increased during the half in view of
the decline in market volatility and increasing demand for
liquidity in small and mid cap equities. Our trading book achieved
gains of GBP12m representing growth of 76% relative to the prior
period.
EU office
We are progressing our plans to establish an EU presence in
Dublin during the first half of FY22, subject to regulatory
approval. Whilst Brexit has had minimal impact on the performance
of the business, an EU office would both restore certain EU
institutional client relationships and provide us with the
opportunity to expand our Capital Markets offering throughout
Europe with the benefit of passporting.
In recent years we have established relationships with some of
the leading growth companies globally and built a network of
international growth focused investors. Our growing reputation
beyond the UK is presenting opportunities for Numis to participate
in international mandates on an increasingly frequent basis. We
believe this represents an excellent growth opportunity for the
business over the longer term and we will be investing in
capability across both Investment Banking and Equities within the
new Irish subsidiary.
Investment portfolio
Our investment portfolio is currently valued at GBP16.2m and we
recognised gains of GBP2.0m during the period, the majority of
which related to a new investment made at the start of the period.
We partially exited one investment during the period and expect to
complete further exits during the second half as we seek liquidity
events for our legacy holdings.
Costs and people
H1 2021 H1 2020 %
GBPm GBPm Change
--------------------------- ------- ------- ---------
Staff costs 55.2 31.3 76.0%
--------------------------- ------- ------- ---------
Share-based payments 5.8 5.2 11.2%
--------------------------- ------- ------- ---------
Non-staff costs 15.7 17.4 (10.0)%
--------------------------- ------- ------- ---------
Total administrative costs 76.7 54.0 42.0%
--------------------------- ------- ------- ---------
Period end headcount 287 285 0.7%
--------------------------- ------- ------- ---------
Average headcount 287 281 2.1%
--------------------------- ------- ------- ---------
Compensation ratio 52.8% 58.0% (5.2)ppts
--------------------------- ------- ------- ---------
Average headcount was broadly in line with the prior period and
the FY20 year end headcount. In an increasingly competitive market
for talent we have continued to invest across the business in
support of our strategic priorities. Our staff have shown great
commitment in both navigating the challenges of remote working
whilst originating and executing a very high volume of
transactions. In response, we have introduced a number of
initiatives to support staff and recognise their efforts during
these challenging circumstances.
We expect headcount to increase in the second half of the year
as we focus on Investment Banking hires to provide additional
capacity to execute the anticipated volume of deals. In addition,
we expect to grow the Growth Capital Solutions team in view of the
consistent revenue growth achieved over the past 3 years.
Whilst fixed staff costs are marginally higher than the
comparative period, staff costs overall have increased due to
materially higher variable compensation reflecting the significant
improvement in profit performance over the half. Our share based
payment charge was GBP5.8m reflecting an increase of 11%. We expect
the second half charge to reduce given the particularly high number
of equity awards vested during the first half.
Compensation costs as a percentage of revenue decreased to 53%,
lower than both the comparative period and the FY20 level
reflecting the improved performance of the business. We continue to
target an appropriate alignment between staff compensation,
business performance and shareholder returns. Over the course of
the second half of the year we may incur further investment spend
related to our targeted hiring activities which may offset any
further reductions in the compensation ratio.
Non-staff costs are marginally below the comparative period.
Savings related to the business operating on a remote working basis
for much of the period have been offset by a GBP0.7m increase in
occupancy costs attributable to the commencement of our lease on
the new office in February ahead of the anticipated relocation in
September. In line with previous guidance, we expect the London
office move to result in a total occupancy cost increase of GBP4m
for FY21, and from FY22 our ongoing occupancy costs will be
approximately GBP3m higher than FY20. In addition, we are likely to
incur approximately GBP1m of exceptional expenses related to the
relocation in the current year.
Capital and Liquidity
The Group's net asset position as at 31 March 2021 was GBP175.3m
representing an increase of 11.2% compared to 30 September 2020. We
continue to operate significantly in excess of our regulatory
capital requirements and believe this provides the group with the
flexibility to pursue strategic opportunities whilst also
navigating the cyclical nature of our industry with confidence.
Our cash position was in line with the comparative period and
below the FY20 year end position. During the half we started
incurring capital expenditure on the new office fit-out and
relocation project, the majority of this investment spend will
occur in the second half. In addition, cash was utilised by an
increase in our trading books reflecting the significantly improved
market environment compared to last year when the Group's liquidity
position benefited from a reduction in trading book limits due to
pandemic related volatility. Our cash position is supplemented by a
revolving credit facility which is currently undrawn, this facility
has recently been extend on the same terms to 2023.
Dividends and share purchases
The Board has declared an interim dividend for the year of 5.5p
per share in accordance with our stated policy. The dividend will
be paid on 18 June 2021 to shareholders on the Register on 21 May
2021.
During the period we spent GBP11.5m on share repurchases
compared to GBP5.5m in the previous period. This increase in
repurchase spend was attributable to a higher than usual volume of
share vestings in the period and associated tax offset purchases.
Our share count remains 6m lower than 5 years ago, however we
expect the share count to increase at the end of the second half of
the year given the likely vesting of 2016 LTIP awards. Our
intention remains to continue mitigating the impact of staff equity
awards through buybacks over time. In addition, and in accordance
with our returns policy, we will continue to review the possibility
to return excess capital through buybacks and special dividends
taking into consideration the capital and liquidity requirements of
the Group's growth initiatives.
Current trading and outlook
The Investment Banking pipeline continues to benefit from a high
volume of IPO mandates and the near term outlook for further Growth
Capital Solutions and M&A revenues is also encouraging. We
therefore expect the broad profile of Investment Banking revenues
featured throughout the first half to be sustained in the second
half of the year.
Whilst our pipeline is becoming more diversified by sector as
market confidence builds across a wider range of industries,
execution of the IPO pipeline in particular will be dependent upon
the current positive market environment persisting.
Alex Ham & Ross Mitchinson
Co-Chief Executive Officers
7 May 2021
Consolidated Income Statement
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2021
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ --------------- ---------- ---------------
Revenue 3 115,426 63,104 154,899
Other operating income/(loss) 4 1,974 (1,904) 310
------------------------------- ------ --------------- ---------- ---------------
Total income 117,400 61,200 155,209
Administrative expenses 5 (76,652) (53,973) (118,409)
Operating profit 40,748 7,227 36,800
Finance income 6 1 420 986
Finance costs 6 (1,422) (390) (723)
------------------------------- ------ --------------- ---------- ---------------
Profit before tax 39,327 7,257 37,063
Taxation (9,549) (1,003) (5,713)
Profit after tax 29,778 6,254 31,350
------------------------------- ------ --------------- ---------- ---------------
Attributable to:
Owners of the parent 29,778 6,254 31,350
------------------------------- ------ --------------- ---------- ---------------
Earnings per share 7
Basic 28.6p 6.0p 29.9p
Diluted 25.7p 5.5p 26.7p
Consolidated Statement of Comprehensive Income
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2021
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------- ---------- ---------------
Profit for the period 29,778 6,254 31,350
Exchange differences on translation
of foreign operations (1) 27 227
--------------------------------------- --------------- ---------- ---------------
Other comprehensive income for
the period, net of tax (1) 27 227
Total comprehensive income for
the period, net of tax, attributable
to the owners of the parent 29,777 6,281 31,577
--------------------------------------- --------------- ---------- ---------------
Consolidated Balance Sheet
UNAUDITED AS AT 31 MARCH 2021
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
---------------------------------- ------ ---------- ---------- -------------
Non-current assets
Property, plant and equipment 3,680 2,418 2,596
Intangible assets 380 222 406
Right-of-use asset 9a 39,463 5,045 4,020
Deferred tax 9b 6,030 3,194 5,617
---------------------------------- ------ ---------- ---------- -------------
49,553 10,879 12,639
Current assets
Trade and other receivables 9c 410,415 246,151 326,156
Trading investments 9d 51,501 25,367 38,089
Stock borrowing collateral 9e 21,769 10,658 18,222
Current income tax receivable 1,060 1,004 1,332
Derivative financial instruments - - 18
Cash and cash equivalents 9g 97,619 95,332 125,217
---------------------------------- ------ ---------- ---------- -------------
582,364 378,512 509,034
Current liabilities
Trade and other payables 9c (393,505) (236,176) (340,265)
Financial liabilities 9f (23,322) (10,882) (19,170)
Lease liabilities 9a (1,129) (1,925) (1,962)
(417,956) (248,983) (361,397)
Net current assets 164,408 129,529 147,637
---------------------------------- ------ ---------- ---------- -------------
Non-current liabilities
Lease liabilities 9a (38,684) (3,736) (2,643)
---------------------------------- ------ ---------- ---------- -------------
Net assets 175,277 136,672 157,633
---------------------------------- ------ ---------- ---------- -------------
Equity
Share capital 5,922 5,922 5,922
Other reserves 14,833 19,755 22,421
Retained earnings 154,522 110,995 129,290
---------------------------------- ------ ---------- ---------- -------------
Total equity 175,277 136,672 157,633
---------------------------------- ------ ---------- ---------- -------------
Consolidated Statement of Changes in Equity
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2021
Other Retained
Share capital reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October 2019 5,922 20,639 111,593 138,154
Profit for the period 6,254 6,254
Other comprehensive income 27 - 27
-------------------------------------- --- --------------- ---------- ------------- -----------
Total comprehensive income for
the period - 27 6,254 6,281
-------------------------------------- --- --------------- ---------- ------------- -----------
Dividends paid (6,787) (6,787)
Movement in respect of employee
share plans (912) (2,853) (3,765)
Deferred tax related to share-based
payments (647) (647)
Net movement in Treasury shares 3,436 3,436
-------------------------------------- --- --------------- ---------- ------------- -----------
Transactions with shareholders - (912) (6,852) (7,763)
-------------------------------------- --- --------------- ---------- ------------- -----------
Balance at 31 March 2020 5,922 19,755 110,995 136,672
-------------------------------------- --- --------------- ---------- ------------- -----------
Balance at 1 October 2019 5,922 20,639 111,593 138,154
Profit for the year 31,350 31,350
Other comprehensive income 227 - 227
-------------------------------------- --- --------------- ---------- ------------- -----------
Total comprehensive income for
the year - 227 31,350 31,577
-------------------------------------- --- --------------- ---------- ------------- -----------
Dividends paid (12,582) (12,582)
Movement in respect of employee
share plans 1,555 (1,711) (156)
Deferred tax related to share-based
payments 677 677
Net movement in Treasury shares (37) (37)
-------------------------------------- --- --------------- ---------- ------------- -----------
Transactions with shareholders - 1,555 (13,653) (12,098)
-------------------------------------- --- --------------- ---------- ------------- -----------
Balance at 30 September 2020 5,922 22,421 129,290 157,633
-------------------------------------- --- --------------- ---------- ------------- -----------
Balance at 1 October 2020 5,922 20,421 129,290 157,633
Profit for the period 29,778 29,778
Other comprehensive income (1) - (1)
------------------------------------------- --------------- ---------- ------------- ---------
Total comprehensive income for
the period - (1) 29,778 29,777
------------------------------------------- --------------- ---------- ------------- ---------
Dividends paid (6,825) (6,825)
Movement in respect of employee
share plans (7,587) (5,802) (13,389)
Deferred tax related to share-based
payments 905 905
Net movement in Treasury shares 7,176 7,176
------------------------------------------- --------------- ---------- ------------- ---------
Transactions with shareholders - (7,587) (4,546) (12,133)
------------------------------------------- --------------- ---------- ------------- ---------
Balance at 31 March 2021 5,922 14,833 154,522 175,277
------------------------------------------- --------------- ---------- ------------- ---------
Consolidated Statement of Cash Flows
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2021
6 months
6 months ended ended Year ended
31 March 30 September
31 March 2021 2020 2020
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- ------ --------------- ---------- -------------
Cash flows from operating activities 10 3,988 28,175 76,051
Interest paid (1,104) (270) (497)
Taxation paid (8,785) (3,464) (9,601)
--------------------------------------- ------ --------------- ---------- -------------
Net cash (used in)/from operating
activities (5,901) 24,441 69,953
Investing activities
Purchase of property, plant and
equipment (1,577) (212) (1,029)
Purchase of intangible assets (49) (189) (431)
Interest received 1 420 986
Net cash (used in)/from investing
activities (1,625) 19 (474)
Financing activities
Purchase of own shares - Employee
Benefit Trust (9,908) (3,548) (5,426)
Purchase of own shares - Treasury (1,555) (1,953) (4,344)
Cash paid in respect of lease
arrangements - principal (1,493) (922) (1,873)
Cash paid in respect of lease
arrangements - discount (318) (120) (226)
Dividends paid (6,825) (6,787) (12,582)
--------------------------------------- ------ --------------- ---------- -------------
Net cash used in financing activities (20,099) (13,330) (24,451)
Net movement in cash and cash
equivalents (27,625) 11,130 41,028
--------------------------------------- ------ --------------- ---------- -------------
Opening cash and cash equivalents 125,217 84,202 84,202
Net movement in cash and cash
equivalents (27,625) 11,130 41,028
Exchange movements 27 - (13)
--------------------------------------- ------ --------------- ---------- -------------
Closing cash and cash equivalents 97,619 95,332 125,217
--------------------------------------- ------ --------------- ---------- -------------
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 2020, 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 2020. 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, there were no new standards or amendments to
IFRS became effective and were adopted by the Company and the
Group.
2. Segmental reporting
Geographical information
The Group is managed as an integrated investment banking and
equities 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
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- -------------
United Kingdom 110,271 60,358 144,333
United States of America 5,155 2,746 10,566
115,426 63,104 154,899
-------------------------- --------------- --------------- -------------
The following is an analysis of the carrying amount of
non-current assets (excluding deferred tax assets) by the
geographical area in which the assets are located:
6 months ended 6 months ended Year ended
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- -------------
United Kingdom 40,887 4,225 3,994
United States of America 2,636 3,460 3,028
43,523 7,685 7,022
-------------------------- --------------- --------------- -------------
Other information
In addition, the analysis below sets out the income performance
and net asset split between our investment banking and equities
business and the equity holdings which constitute our investment
portfolio.
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------------------- ---------------------- -------------
Equities income 33,386 26,233 53,195
Corporate retainers 6,293 6,811 13,536
Total corporate transactions revenues 75,747 30,060 88,168
---------------------------------------- ---------------------- ---------------------- -------------
Revenue (see note 3) 115,426 63,104 154,899
Investment activity net gains/(losses) 1,974 (1,904) 310
Contribution from investment portfolio 1,974 (1,904) 310
---------------------------------------- ---------------------- ---------------------- -------------
Total income 117,400 61,200 155,209
---------------------------------------- ---------------------- ---------------------- -------------
6 months 6 months
Net assets ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ---------- -------------
Investment banking and equities
activities 61,434 28,380 17,685
Investing activities 16,224 12,960 14,731
Cash and cash equivalents 97,619 95,332 125,217
--------------------------------- ---------- ---------- -------------
Total net assets 175,277 136,672 157,633
--------------------------------- ---------- ---------- -------------
3. Revenue
6 months ended 6 months ended Year ended
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------- --------------- --------------- -------------
Net trading gains 11,507 6,548 16,003
Institutional income 21,879 19,685 37,192
--------------------------- --------------- --------------- -------------
Equities income 33,386 26,233 53,195
Corporate retainers 6,293 6,811 13,536
Advisory 12,428 7,225 11,146
Capital markets 63,319 22,835 77,022
--------------------------- --------------- --------------- -------------
Investment banking income 82,040 36,871 101,704
--------------------------- --------------- --------------- -------------
Total 115,426 63,104 154,899
--------------------------- --------------- --------------- -------------
4. Other operating income/(loss)
Other operating income/(loss) represents net gains or losses
made on investments which are held outside of the market making
portfolio. The gains or losses reflect price movements on quoted
holdings, fair value adjustments on unquoted holdings and related
dividend income. In the period, our portfolio of unquoted
investments benefitted from positive valuation movements,
specifically in relation to the release of previous downward
valuation adjustments in relation to the impact from the COVID-19
pandemic.
5. Administrative expenses
6 months ended 6 months ended Year ended
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------- --------------- --------------- -------------
Wages and salaries 45,719 26,285 63,086
Social security costs 8,639 4,091 10,771
Compensation for loss of office 12 172 440
Pension costs 808 801 1,719
Share-based payments 5,824 5,237 9,961
Staff costs 61,002 36,586 85,977
6 months ended 6 months ended Year ended
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
------------------------------------- --------------- --------------- -------------
Depreciation of property, plant
and equipment 492 584 1,223
Depreciation of right-of-use assets 1,229 862 1,793
Amortisation of intangible assets 75 47 105
Other non-staff costs 13,854 15,894 29,311
Non-staff costs 15,650 17,387 32,432
------------------------------------- --------------- --------------- -------------
76,652 53,973 118,409
------------------------------------- --------------- --------------- -------------
The average number of employees during the period has increased
to 287 (31 March 2020: 281). Staff costs including share award
related charges have increased by 66.7% compared to the prior
period due to the improved operating performance resulting in
higher variable compensation. Non-staff costs have decreased by
10.0% compared to the prior period.
6. Finance income and Finance costs
Finance income for the period:
6 months ended 6 months ended Year ended
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------- --------------- --------------- -------------
Interest income 1 226 261
Net foreign exchange gains - 194 650
Other income - - 75
---------------------------- --------------- --------------- -------------
1 420 986
---------------------------- --------------- --------------- -------------
Finance costs for the period:
6 months ended 6 months ended Year ended
30 September
31 March 2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------------- --------------- -------------
Interest expense 211 270 497
Unwind of lease liability discount 318 120 226
Net foreign exchange losses 893 - -
------------------------------------ --------------- --------------- -------------
1,422 390 723
------------------------------------ --------------- --------------- -------------
Finance costs have increased in the current financial year due
to the unwinding of the lease liability discount for the new London
office lease and foreign exchange losses in relation to US
operations, due to the strengthening of GBP over the period.
7. Earnings per share
Basic earnings per share is calculated on profits after tax of
GBP29,778,000 (31 March 2020: GBP6,254,000) and 104,242,148 (31
March 2020: 104,162,166) 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
6 months ended ended Year ended
31 March 30 September
31 March 2021 2020 2020
Unaudited Unaudited Audited
Number Number Number
Thousands Thousands Thousands
------------------------------------- --------------- ---------- -------------
Weighted average number of ordinary
shares in issue during the period
- basic 104,242 104,162 104,987
Dilutive effect of share awards 11,602 8,946 12,313
------------------------------------- --------------- ---------- -------------
Diluted number of ordinary shares 115,844 113,108 117,300
------------------------------------- --------------- ---------- -------------
8. Dividends
6 months
ended 6 months ended Year ended
31 March 30 September
2021 31 March 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------ ---------- --------------- -------------
Final dividend year ended 30 September
2019 (6.50p) 6,788 6,788
Interim dividend year ended 30 September
2020 (5.50p) 5,794
Final dividend year ended 30 September
2020 (6.50p) 6,825
Distribution to equity holders of
Numis Corporation Plc 6,825 6,788 12,582
------------------------------------------ ---------- --------------- -------------
The Board has approved the payment of an interim dividend of
5.50p per share (2020: interim 5.50p per share). This dividend will
be payable on 18 June 2021 to shareholders on the register of
members at the close of business on 21 May 2021. These financial
statements do not reflect this dividend payable.
Distributable reserves
Following an internal review of the Company's distributable
reserves on a solo entity basis over the period from FY05 to date,
a number of dividends and buybacks have been identified where the
determination of distributable reserves was inconsistent with
guidance on the application of the Companies Act 2006. The
dividends concerned relate to numerous periods between FY06 and
FY20, and the buybacks concerned relate to periods from FY13 to
December 2020.
While sufficient distributable reserves existed in the
consolidated Group at the times of all historic payments, the level
of distributable reserves in the Company itself has been determined
to have been insufficient. At the next AGM (February 2022),
resolutions will be proposed to address the historic positions. The
Group's current and historic capital positions are unaffected by
the outcome of this review and Group's ability to make
distributions in accordance with its dividend policy is
unaffected.
9. Balance sheet items
(a) 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 plus a new
15-year lease for a new office in London.
(b) Deferred tax
As at 31 March 2021 deferred tax assets totalling GBP6,030,000
(30 September 2020: GBP5,617,000) have been recognised reflecting
management's 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 GBP23,067,000 (30 September 2020:
GBP12,687,000).
(d) Trading investments
Included within trading investments is GBP16,224,000 (30
September 2020: GBP14,701,000) of investments held outside of the
market making portfolio. The net increase during the period has
been due to favourable revaluation movements largely attributable
to the improving situation in relation to COVID-19 and the positive
progress of a new investment in the period.
(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.
(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 in line with than those reported as at 31
March 2020. Dividend distributions have been maintained at a
similar level to the prior period (GBP6.8m cash outflow). The
repurchase of shares into Treasury and the Employee Benefit Trust
have continued, but at a higher level than the prior period
(GBP11.5m cash outflow).
(h) Investment commitment
During 2018 the Company signed an investment subscription
agreement in a U.S. private fund with a total subscription value of
$1.0m. The full amount of the subscription had not been called upon
at the balance sheet date. The fund calls upon capital as it is
required and at the balance sheet date $960,000 had been called up
and paid. This is classified within Trading Investments. The
remaining $40,000 has not yet been called and is therefore a
commitment until it is paid over to the fund. The subscription
agreement allows that the investment can be called any time up till
the 5th anniversary of the agreement, which is June 2023.
10. Reconciliation of profit before tax to cash from operating activities
6 months
6 months ended ended Year ended
31 March 30 September
31 March 2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------- --------------- ---------- -------------
Profit before tax 39,327 7,257 37,063
Net finance expense/(income) 1,421 (30) (263)
Depreciation charge on property,
plant and equipment 492 584 1,223
Depreciation charge on right-of-use
asset 1,229 862 1,793
Amortisation charge on intangible
assets 75 47 105
Share scheme charges 5,252 5,200 9,806
(Increase)/decrease in current
asset trading investments (13,412) 13,096 374
(Increase) in trade and other receivables (84,259) (58,893) (138,898)
(Increase)/decrease in stock borrowing
collateral (3,547) 3,982 (3,582)
Increase in trade and other payables 57,392 54,292 166,669
Other balance sheet movements in
respect of leases - 676 676
Decrease in derivatives 18 1,103 1,085
Cash from operating activities 3,988 28,175 76,051
------------------------------------------- --------------- ---------- -------------
The increase in cash from operating activities during the six
months ended 31 March 2021 reflects an increase in profitability
for the period, partially offset by an increase in current asset
trading investments and outflows in respect of seasonal expense
items which fall within the first half of our financial year.
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END
IR VQLFBFELEBBZ
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