Source - LSE Regulatory
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 £82m

·    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 £11.5m 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

£115.4m

£63.1m

82.9%

Underlying Operating profit

£38.8m

£9.1m

325%

Profit before tax

£39.3m

£7.3m

442%

EPS

25.7p

5.5p

365%

Cash

£97.6m

£95.3m

2.4%

Net assets

£175.3m

£136.7m

28.2%

 

 

 

 

Operating highlights

 

 

 

Corporate clients

185

189

(2.1)%

Average market cap of clients

£1,341m

£692m

94%

Revenue per head (annualised)

£804k

£449k

79%

Operating margin

33.6%

14.5%

+19.1ppts

Spend on share repurchases

£11.5m

£5.5m

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 £200m, 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 £115.4m (2020: £63.1m) and Underlying Operating profit increased substantially to £38.8m (2020: £9.1m) reflecting the positive effect of operational gearing in the business.  Profit before tax was £39.3m representing an increase of more than £30m relative to the comparative period and included £2.0m of gains recognised on investments held outside of our market making business (2020: £1.9m loss).  Our balance sheet remains resilient with net assets of £175.3m, and our liquidity position was maintained despite new office related capital expenditure and higher share repurchase spend; cash balances were £97.6m (2020: £95.3m).  

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

£m

H1 2020

£m

%

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 £63.3m, 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

£m

H1 2020

£m

%

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 £12m 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 £16.2m and we recognised gains of £2.0m 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

£m

H1 2020

£m

%

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 £5.8m 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 £0.7m 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 £4m for FY21, and from FY22 our ongoing occupancy costs will be approximately £3m higher than FY20.  In addition, we are likely to incur approximately £1m 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 £175.3m 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 £11.5m on share repurchases compared to £5.5m 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 MONTHS ENDED 31 MARCH 2021

 

 

 

 

 

6 months ended

6 months ended

Year ended

 

 

31 March 2021

31 March 2020

30 September 2020

 

 

      Unaudited

Unaudited

Audited

 

Notes

        £'000

£'000

        £'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 MONTHS ENDED 31 MARCH 2021

 

 

6 months ended

6 months ended

Year ended

 

31 March 2021

31 March 2020

30 September 2020

 

      Unaudited

Unaudited

Audited

 

        £'000

£'000

        £'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 2021

31 March 2020

30 September 2020

 

 

Unaudited

Unaudited

Audited

 

Notes

£'000

£'000

£'000

Non-current assets

 

 

 

 

Property, plant and equipment

 

3,680

2,418

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 MONTHS ENDED 31 MARCH 2021

 

 

 

Share capital

£'000

Other reserves £'000

Retained earnings £'000

Total

£'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 MONTHS ENDED 31 MARCH 2021

 

 

 

 

 

 

6 months ended

6 months ended

Year ended

 

 

31 March 2021

31 March 2020

30 September 2020

 

 

Unaudited

Unaudited

Audited

 

Notes

£'000

£'000

£'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

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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 ended

6 months ended

Year ended

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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

 

 

 

 

 

 

Net assets

6 months ended

6 months ended

Year ended

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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

 

31 March 2021

31 March 2020

30 September 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

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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 £29,778,000 (31 March 2020: £6,254,000) 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 ended

6 months ended

Year ended

 

31 March 2021

31 March 2020

30 September 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 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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 £6,030,000 (30 September 2020: £5,617,000) 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 £23,067,000 (30 September 2020: £12,687,000).

 

(d)      Trading investments

Included within trading investments is £16,224,000 (30 September 2020: £14,701,000) 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 (£6.8m cash outflow). The repurchase of shares into Treasury and the Employee Benefit Trust have continued, but at a higher level than the prior period (£11.5m 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 ended

6 months ended

Year ended

 

31 March 2021

31 March 2020

30 September 2020

 

Unaudited

Unaudited

Audited

 

£'000

£'000

£'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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR VQLFBFELEBBZ
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.