TIDMNUM
RNS Number : 1361R
Numis Corporation PLC
07 December 2016
Numis Corporation Plc Preliminary Results
for the year ended 30 September 2016
London, 7 December 2016: Numis Corporation Plc ("Numis") today
announces preliminary results for the year ended 30 September 2016.
Numis is the holding company of Numis Securities Limited, the
independent corporate advisory and stockbroking business.
Highlights
2016 2015 Change
Revenue GBP112.3m GBP98.0m +15%
-------------------------- ------------ ----------- -------
Profit before tax GBP32.5m GBP26.1m +25%
Earnings per share 23.5p 19.5p +21%
-------------------------- ------------ ----------- -------
Total dividend for the
year 12.0p 11.5p +4%
-------------------------- ------------ ----------- -------
Cash balances GBP89.0m GBP59.6m +49%
-------------------------- ------------ ----------- -------
-- Revenue growth of 15% to GBP112.3m, the highest level in the
Group's history. Within this, we saw growth across the business,
with Equities revenue up 15% to GBP38.4m and Corporate Broking and
Advisory (CB&A) revenue up 14% to GBP73.9m. Overall staff
numbers were largely unchanged and we believe our revenue per head
compares very favourably to industry peers.
-- Profit before tax up 25% to GBP32.5m, which includes GBP3.7m
of net gains on our strategic investment portfolio.
-- Cash generation has been strong and we ended the year with
cash balances of GBP89.0m (2015: GBP59.6m) and net assets of
GBP129.1m (2015: GBP115.5m), both record highs for the Group.
-- The proposed final dividend is increased by 8% to 6.5p,
giving a full year dividend of 12p, an increase of 4%. The 12p full
year dividend is the highest in the Group's history.
-- The strong performance within Equities was driven by our
continued focus on offering best-in-class research, sales and
execution services. This was recognised in the Thomson Reuters
Extel survey, in which we were ranked No 1 UK Small & Mid Cap
Brokerage Firm for the 4(th) year in a row.
-- The strong performance within CB&A reflects our
dedication to working hard on behalf of our corporate clients. We
raised GBP1.8bn of equity capital through 47 equity raisings
including 13 IPO's. In addition, we completed 26 M&A
transactions for our corporate clients, and executed GBP1.1bn of
block trades. Our corporate client list continues to grow, with 16
net additions during the year taking the total number of clients
for whom we act to 199.
-- On 1st September 2016, founder Oliver Hemsley was succeeded
by co-CEOs Alex Ham and Ross Mitchinson. This transition has been
seamless and Oliver's drive and determination remain an important
guiding light for the firm.
-- Trading in our new financial year to date has been solid and
gives us confidence for the year; we have completed 10 capital
raising transactions including 2 IPO's, and the daily revenue
within Equities is performing well.
Alex Ham and Ross Mitchinson, Co-Chief Executive Officers,
issued the following joint statement:
"Numis generated record revenues in a year when stock market
performance was mixed, and market-wide corporate activity was
muted. This demonstrates the robust nature of the business, and is
testament to the quality of our people and the strong relationships
that we enjoy with both our corporate and institutional clients.
Numis has built an excellent franchise and we are excited to be
leading the firm to the next level."
Contacts:
Numis Corporation:
Alex Ham & Ross Mitchinson, Co-Chief Executives 020 7260 1245
Simon Denyer, Group Finance Director 020 7260 1225
Brunswick:
Gill Ackers 020 7404 5959
Simone Selzer 020 7404 5959
Grant Thornton UK LLP (Nominated Adviser):
Philip Secrett 020 7383 5100
Samantha Harrison 020 7383 5100
Notes for Editors
Numis is a leading independent corporate advisory and
stockbroking group offering a full range of research, execution,
corporate broking and advisory services to companies quoted in the
UK and their investors.
Review of Performance
Overall Performance
We are pleased to report that the business generated record
revenues, with all revenue streams contributing to this success.
During the year ended 30(th) September 2016, revenues increased by
15% to GBP112.3m (2015: GBP98.0m) and profit before tax increased
by 25% to GBP32.5m (2015: GBP26.1m). Profit before tax includes
GBP3.7m of gains recognised on investments held outside of our
market making business (2015: GBP2.0m loss). As described in note
10, we have dispensed with the use of non-IFRS profit numbers in
order to bring the presentation of our results in-line with best
practice.
Market Conditions
For the period from 1(st) October 2015 to 30(th) September 2016,
almost all major UK equity indices recorded double-digit growth.
Much of this performance came during our final quarter
(July-September), as the market digested the Brexit-induced
weakness of Sterling and reacted favourably to the US Presidential
election result, as well as the first real signs of a rotation out
of bonds. During the fiscal year, the Numis Smaller Companies Index
generated returns of 12.3%, and the Numis UK Mid Cap Index +14.2%.
It is worth noting that the UK market saw huge sector rotations
during this period, with domestic cyclicals struggling at the
expense of a strong bounce in stocks in the Mining and Oil &
Gas sectors.
For the market as a whole, the value of secondary trading on the
LSE has shown an improvement, with secondary trading (by value) in
Main Market stocks up 20% on the comparable twelve month period.
However, equity issuance across the market has been less buoyant
with equity funds raised on AIM and the Main Market combined
totalling GBP22.4bn, down 29% versus the prior year. This paucity
of equity capital raising was partly explained by a hiatus in
activity both sides of the UK referendum on 23rd June. M&A
activity across the market has also been muted, although the
weakness of sterling combined with increasing availability of cheap
finance and the huge 'dry powder' of financial sponsors suggests
that M&A activity is likely to pick up.
Corporate Broking & Advisory ('CB&A')
We believe in building long-term relationships with our
corporate clients, endeavouring to provide them with service of
exceptional quality which is tailored to their needs. We pride
ourselves on the strength of these relationships, which we believe
is reflected in the momentum that we enjoy both in client numbers,
as well as longevity of relationship and in fee generation over
time.
Our revenue performance from CB&A was impressive, at
GBP73.9m (2015: GBP64.6m) and the highest in the Group's history.
This performance was very broadly based, including carrying out 13
IPOs, 26 pure advisory roles and 13 block trades and secondary
sell-downs.
We continue to attract high quality corporate clients, with 16
net additions during the year taking the number of companies for
whom we act as broker to 199. The average market cap of these
companies now averages around GBP560m, but it is important to note
that the median is GBP240m and we remain very committed to the
small cap space. This is reflected in our wins during the year,
which have included businesses from GBP50m market cap to well over
GBP1bn market cap. We remain ranked #2 Broker and #2 Adviser
overall by total number of stock market clients as per the most
recent Corporate Advisers Rankings Guide.
Notable deals completed during the year included IPOs for
Hostelworld, Countryside, The Gym Group, Ascential, Motorpoint and
Diurnal. Whilst IPOs are important for our business, it is worth
noting they represented just 15% of Group revenues (2015: 15%). We
also completed a number of sizeable secondary raises for our
corporate clients including Micro Focus, INPP, PHP and Alliance
Pharma. In total we raised GBP1.8bn of new equity capital during
the year (2015: GBP2.1bn) which equates to 8.0% of total equity
funds raised on the London Stock Exchange (2015: 6.9%). For fiscal
year 2016 we were ranked #2 for UK equity issuance as measured by
both value and number of transactions.
Building our corporate advisory capabilities remains a major
area of focus. We completed 26 pure advisory roles during the year
(2015: 31) including Trinity Mirror's acquisition of Local World,
the disposal of UTV Television to ITV, the recommended cash offer
for Bwin Party, and Micro Focus' proposed merger with Hewlett
Packard's enterprise software business segment.
We have also built up a strong track record in the successful
execution of block trades and secondary sell downs, notably acting
as sole bookrunner on the placing of circa GBP700m Saga shares by
Acromas. During the year we executed 13 such transactions with an
aggregate value of GBP1.1bn.
We have been further developing our ability to conduct private
placements. There is an ever deeper and more developed pool of
capital that is happy to own unlisted securities, and often private
companies want to access this capital without going through an IPO.
In January we took part in a GBP128m private placement in
Skyscanner, and also acted in a private fundraising for Cambridge
Innovation Capital. Since the period end we have helped to raise
money privately for Oxford Science & Innovation and Accelerated
Digital Ventures. We see this as an exciting growth area, and plays
well to our strengths in matching up UK growth companies with
sophisticated and long-term investors. We are lucky to have a
Venture Broking team that spend huge time and energy filtering
those private companies, and we continue to expand our network of
investors in this space.
Equities
High quality research and sales is at the heart of our Equities
business. It creates relationships based on trust with our
institutional clients and is at the core of our powerful
international distribution capability. Our sector analysts cover
approximately 350 companies across 15 sectors, whilst our
Investment Funds research team covers around 400 investment
companies and funds. Our highly regarded sales team provides a
service to more than 450 active institutional clients across the
UK, Europe, the Americas and Australia. Data from Starmine and the
various alpha capture systems continue to demonstrate the very
impressive value we add to our institutional clients.
Our US office continues to provide a best-in-class service in
marketing UK equities to major North American institutional
investors, including managing a huge number of roadshows and
reverse roadshows. Our distribution offering also extends to the
Private Client Fund Managers through our PCFM team, who access a
network of over 3,000 active fund managers at 150 PCFM houses in
the UK, who collectively can be a very powerful pool of
liquidity.
We provide execution services in over 650 stocks, of which over
500 are listed on the Main Market of the London Stock Exchange. In
2016 we had #1 market share in 127 stocks (2015: 133) across these
markets, and were a top 3 provider in a further 92 stocks (2015:
107). With access to multiple trading venues and liquidity
providers we are able to deliver an exceptionally strong execution
capability to our institutional clients.
Combined institutional commission & trading revenues for the
year totalled GBP38.4m (2015: GBP33.4m). Whilst there was an
overall increase in market volume and value traded, we have gained
market share of direct customer business and continue to prosper
despite the rise of electronic trading systems and dark pools of
liquidity.
Our well-resourced market-making and sales-trading teams ensure
that we are very well placed to source liquidity on behalf of our
institutional clients, which often requires skill and human effort
that cannot be found in a dark pool or standalone electronic
trading venue. This growth in institutional commissions was also
achieved despite the changes to the institutional broker payment
model as they look to embrace MiFid-2, which is due to be
implemented in January 2018. Our trading revenues saw a healthy
increase in to the year end, and were achieved with slightly lower
levels of capital usage than normal.
Costs and People
Administrative expenses for the year totalled GBP83.6m (2015:
GBP70.1m). Compensation costs as a percentage of revenue have
increased to 52% (2015: 48%) partly as a result of non-recurring
cash costs arising from a continued emphasis on building the
quality of our core services. Non-compensation costs comprise
expenses incurred in the normal course of business, the most
significant of which relate to technology, information systems,
market data, brokerage, clearing and exchange fees.
Average headcount remained stable at 213 (2015: 210) although we
ended the year with headcount of 220 (end 2015: 211). The business
saw a higher level of staff churn than usual as we selectively
hired very high quality individuals and teams. We have seen
slightly higher than average wage inflation following a thorough
benchmarking exercise, although this should further contribute to
us being viewed as a premium employer in the market.
The calibre and dedication of our people was instrumental in
Numis being voted #1 UK Small & Mid Cap Brokerage Firm by both
companies and institutions for the fourth year in succession in the
2016 Thomson Reuters Extel Survey.
Strategic Investments
The value of our strategic investments total GBP29.8m (2015:
GBP25.4m). Of this value, we note that GBP16.7m is in listed and
fairly liquid securities, whilst GBP13.1m is invested in unlisted
securities. The movement during the year reflects follow-on
investments in existing holdings, plus GBP3.2m of fair value
uplifts of which the majority came from our quoted investments. We
continue to believe these investments are complementary to our
existing core business and that they offer an exciting opportunity
for the Group to grow its presence in areas in which it has
expertise. Going forward, there will be a renewed focus on
directing these investments, and it is expected that we will be
more rigorous in re-cycling from existing successful investments
into new opportunities which we find to be attractive.
Financial Position
Our balance sheet strengthened further during the year, with
cash balances totalling GBP89.0m (2015: GBP59.6m), while net assets
have increased to GBP129.1m (2015: GBP115.5m). The increase in cash
balances was helped by increased revenue generation, as well as a
substantial decrease in net market making positions as at the
reporting date compared with the prior year reporting date. In
addition, there were no material new strategic investments during
2016 whereas 2015 saw two major investments relating to Crowdcube
and seed funding provided to the FP Numis Mid Cap Fund. Operational
cash flows continued to dividend distributions (GBP12.9m cash
outflow) and the repurchase of shares into Treasury and the EBT
(GBP6.7m cash outflow).
Our Pillar I required regulatory capital sits at around GBP30m.
The Board continues to review the amount of capital we hold over
and above our minimum regulatory requirement together with cash
balances that may be deemed to be surplus to the needs of the
business. Discussions are ongoing both amongst the Board and with
our shareholders as to possible methods of returning capital where
it is considered surplus to requirements. During 2016 we spent
GBP6.7m buying back our own shares and it is likely this buyback
programme will be enlarged and extended.
Board Changes
David Poutney retired from the Board on 2(nd) February 2016
after nearly 15 years of service to the business.
On 1(st) July 2016, Alex Ham and Ross Mitchinson joined the
Board as Executive Directors and on 1(st) September 2016 took up
their positions as Co-CEO's. Oliver Hemsley, Founder and former
CEO, remains on the Board as an Executive Director.
On 24(th) March 2016, the Company announced that Gerald Corbett,
Non-Executive Chairman of Numis who has served on the Board since
May 2009, will be retiring from the Board. The search for his
successor is ongoing and an announcement regarding this will be
made in due course. Gerald has agreed to remain in place until his
successor is appointed.
Dividend
In view of our robust capital position, cash balances and
confidence in the Group's future prospects, the Board is
recommending a final dividend of 6.5p per share (2015: 6.0p per
share) which increases the total dividend for the year to 12.0p per
share (2015: 11.5 per share).
The final dividend for 2016 will be payable on 10(th) February
2017 to shareholders on the register of members at the close of
business on 16(th) December 2016, subject to shareholder approval
at the Annual General Meeting on 7(th) February 2017. Shareholders
have the option to elect to use their cash dividend to buy
additional shares in Numis through a Dividend Re-Investment Plan
(DRIP). The details of the DRIP will be explained in a circular to
accompany our 2016 Annual Report and Accounts, which will be
circulated to all shareholders on 3(rd) January 2017.
Current Trading and Outlook
Our new financial year has seen the completion of 10 fund raises
including 2 IPOs along with a number of advisory mandates. Equities
revenues are running slightly ahead of the 2016 daily run rate.
Uncertainties surrounding a 'hard' Brexit coupled with the result
of the American presidential election will persist for some time to
come and we remain sensitive to the impact this may have on market
conditions.
However, Numis has always sought to take advantage of
uncertainty by providing high quality independent advice to its
clients. We have a strong balance sheet and a quality corporate
client base which continues to grow. We believe this positions
Numis well to enjoy future success.
Alex Ham & Ross Mitchinson
Co-Chief Executives
7 December 2016
Consolidated Income Statement
FOR THE YEARED 30 SEPTEMBER 2016
2016 2015
Note GBP'000 GBP'000
--------------------------------- ---- -------- --------
Revenue 3 112,335 97,985
Other operating income/(expense) 4 3,759 (1,978)
--------------------------------- ---- -------- --------
Total income 116,094 96,007
Administrative expenses 5 (83,600) (70,115)
--------------------------------- ---- -------- --------
Operating profit 32,494 25,892
Finance income 427 459
Finance costs (390) (269)
--------------------------------- ---- -------- --------
Profit before tax 32,531 26,082
Taxation (6,132) (4,533)
Profit after tax 26,399 21,549
--------------------------------- ---- -------- --------
Attributable to:
Owners of the parent 26,399 21,549
--------------------------------- ---- -------- --------
Earnings per share
Basic 6 23.5p 19.5p
Diluted 6 22.4p 18.3p
Dividends 7 (12,861) (12,139)
--------------------------------- ---- -------- --------
Consolidated Statement of Comprehensive Income
FOR THE YEARED 30 SEPTEMBER 2016
2016 2015
GBP'000 GBP'000
------------------------------------ ------- -------
Profit for the year 26,399 21,549
Exchange differences on translation
of foreign operations 630 227
Other comprehensive income for
the year, net of tax 630 227
Total comprehensive income for
the year, net of tax, attributable
to owners of the parent 27,029 21,776
------------------------------------- ------- -------
Consolidated Balance Sheet
AS AT 30 SEPTEMBER 2016
2016 2015
Note GBP'000 GBP'000
----------------------------- ----- ---------- ----------
Non current assets
Property, plant and
equipment 8a 3,734 4,486
Intangible assets 122 247
Deferred tax 8b 1,666 1,995
----------------------------- ----- ---------- ----------
5,522 6,728
Current assets
Trade and other receivables 8c 170,490 160,397
Trading investments 8d 48,453 57,621
Stock borrowing collateral 8e 3,901 822
Derivative financial
instruments 616 683
Cash and cash equivalents 8g 89,002 59,591
----------------------------- ----- ---------- ----------
312,462 279,114
Current liabilities
Trade and other payables 8c (173,031) (161,646)
Financial liabilities 8f (12,293) (6,913)
Current income tax (3,571) (1,760)
(188,895) (170,319)
Net current assets 123,567 108,795
----------------------------- ----- ---------- ----------
Non current liabilities
Deferred tax 8b (12) (4)
Net assets 129,077 115,519
----------------------------- ----- ---------- ----------
Equity
Share capital 5,922 5,922
Share premium 38,854 38,854
Other reserves 8,238 5,631
Retained earnings 76,063 65,112
----------------------------- ----- ---------- ----------
Total equity 129,077 115,519
----------------------------- ----- ---------- ----------
Consolidated Statement of Changes in Equity
FOR THE YEARED 30 SEPTEMBER 2016
Share Share Other Retained Total
Capital Premium Reserves Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- --------- --------- ---------
Balance at 1 October
2015 5,922 38,854 5,631 65,112 115,519
Profit for the year 26,399 26,399
Other comprehensive
income 630 - 630
--------------------------------- -------- -------- --------- --------- ---------
Total comprehensive
income for the year - - 630 26,399 27,029
--------------------------------- -------- -------- --------- --------- ---------
Dividends paid (12,861) (12,861)
Net movement in Treasury
shares 1,470 1,470
Movement in respect
of employee share plans 1,977 (3,559) (1,582)
Deferred tax related
to share based payments (498) (498)
Transactions with shareholders - - 1,977 (15,448) (13,471)
--------------------------------- -------- -------- --------- --------- ---------
Balance at 30 September
2016 5,922 38,854 8,238 76,063 129,077
--------------------------------- -------- -------- --------- --------- ---------
Share Share Other Retained Total
Capital Premium Reserves Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------------- -------------- ------------------ -------------- ---------
Balance at 1 October
2014 5,922 38,854 8,063 57,238 110,077
Profit for the year 21,549 21,549
Other comprehensive
income 227 - 227
--------------------------------- --------------- -------------- ------------------ -------------- ---------
Total comprehensive
income for the year - - 227 21,549 21,776
--------------------------------- --------------- -------------- ------------------ -------------- ---------
Dividends paid (12,139) (12,139)
Net movement in Treasury
shares 1,608 1,608
Movement in respect
of employee share plans (2,659) (2,411) (5,070)
Deferred tax related
to share based payments (733) (733)
Transactions with shareholders - - (2,659) (13,675) (16,334)
--------------------------------- --------------- -------------- ------------------ -------------- ---------
Balance at 30 September
2015 5,922 38,854 5,631 65,112 115,519
--------------------------------- --------------- -------------- ------------------ -------------- ---------
Consolidated Statement of Cash Flows
FOR THE YEARED 30 SEPTEMBER 2016
2016 2015
Note GBP'000 GBP'000
---------------------------- ----- --------- -----------
Cash flows from operating
activities 9 53,398 10,995
Interest paid (182) (4)
Taxation paid (4,481) (4,524)
---------------------------- ----- --------- -----------
Net cash from operating
activities 48,735 6,467
Investing activities
Purchase of property,
plant and equipment (346) (3,885)
Purchase of intangible
assets - (234)
Interest received 430 487
Net cash from/(used in)
investing activities 84 (3,632)
Financing activities
Purchases of own shares
- Treasury (3,719) (3,473)
Purchases of own shares
- Employee Benefit Trust (3,000) (1,898)
Dividends paid (12,861) (12,139)
---------------------------- ----- --------- -----------
Net cash used in financing
activities (19,580) (17,510)
Net movement in cash
and cash equivalents 29,239 (14,675)
---------------------------- ----- --------- -----------
Opening cash and cash
equivalents 59,591 74,518
Net movement in cash
and cash equivalents 29,239 (14,675)
Exchange movements 172 (252)
---------------------------- ----- --------- -----------
Closing cash and cash
equivalents 89,002 59,591
---------------------------- ----- --------- -----------
Notes to the Financial Statements
1. Basis of preparation and accounting policies
Basis of preparation
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. The statutory accounts for the year ended 30 September 2016
will be delivered to the Registrar of Companies in due course. The
annual report and statutory accounts will be posted to shareholders
on 3 January 2017 and further copies will be available from the
Company Secretary at the Company's registered office. The Company's
Annual General Meeting will be held on 7 February 2017.
The preparation of these 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 significant judgements and estimates applied by the
Group in these preliminary results have been applied on a
consistent basis with the statutory accounts for the years ended 30
September 2015 and 30 September 2014. Although such estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those of
estimates.
The consolidated financial information contained within these
financial statements has been prepared on the historical cost
basis, except for the revaluation of certain financial
instruments.
The consolidated financial information contained within these
financial statements has been prepared on a going concern basis as
the Directors have satisfied themselves that, at the time of
approving the financial information and having taken into
consideration the strength of the Group balance sheet and cash
balances, the Group has adequate resources to continue in
operational existence for at least the next twelve months.
Accounting policies
The consolidated financial information contained within these
financial statements has been 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, and are in accordance
with the accounting policies that were applied in the Group's
statutory accounts for the year ended 30 September 2015.
2. Segmental analysis
Geographical information
The Group is managed as an integrated corporate advisory and
broking 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:
2016 2015
GBP'000 GBP'000
---------------- ---------- ---------
United Kingdom 102,684 89,297
United States 9,651 8,688
112,335 97,985
---------------- ---------- ---------
There are no clients who accounted for more than 10% of revenues
in the year ended 30 September 2016 (2015: Nil).
The following is an analysis of the carrying amount of
non-current assets (excluding financial instruments and deferred
tax assets) by the geographical area in which the assets are
located:
2016 2015
GBP'000 GBP'000
---------------- -------- --------
United Kingdom 3,744 4,573
United States 112 160
3,856 4,733
---------------- -------- --------
Other information
In addition, the analysis below sets out the revenue performance
and net asset split between our core advisory & stockbroking
business and the small number of equity holdings which constitute
our investment portfolio.
2016 2015
GBP'000 GBP'000
------------------------------------------------------------- -------- --------
Net institutional commission and trading income 38,419 33,390
Corporate transaction revenues 64,293 55,654
Corporate retainers 9,623 8,941
------------------------------------------------------------- -------- --------
Revenue from corporate advisory & stockbroking (see note 3) 112,335 97,985
Investment activity net gains/(losses) 3,759 (1,978)
Contribution from investing activities 3,759 (1,978)
------------------------------------------------------------- -------- --------
Total 116,094 96,007
------------------------------------------------------------- -------- --------
Net assets
Corporate advisory & stockbroking 2,573 25,105
Cash collateral at clearing houses 7,670 5,430
Investing activities 29,832 25,393
Cash balances 89,002 59,591
------------------------------------------------------------- -------- --------
Total net assets 129,077 115,519
------------------------------------------------------------- -------- --------
3. Revenue
2016 2015
GBP'000 GBP'000
--------------------------- ---------- ---------
Net trading gains 6,496 4,056
Institutional commissions 31,923 29,334
---------------------------- ---------- ---------
Net institutional
income 38,419 33,390
Corporate retainers 9,623 8,941
Advisory fees 16,261 17,921
Placing commissions 48,032 37,733
---------------------------- ---------- ---------
112,335 97,985
--------------------------- ---------- ---------
4. Other operating income/(expense)
Other operating income/(expense) represent gains/(losses) made
on investments which are held outside of the market making
portfolio. The majority of the gain recorded in 2016 reflects price
movements and dividend income in respect of quoted holdings.
5. Administrative expenses
2016 2015
GBP'000 GBP'000
------------------------ --------- ---------
Wages and salaries 43,651 36,131
Social security costs 6,592 5,201
Compensation for loss
of office 487 32
Other pension costs 1,923 1,930
Share based payments 6,229 4,104
Non compensation costs 24,718 22,717
83,600 70,115
------------------------ --------- ---------
The average number of employees during the year increased to 213
(2015: 210) with the number as at 30 September 2016 totalling 220
(30 September 2015: 211). Compensation costs as a percentage of
revenue have increased to 52% (2015: 48%) partly as a result of
cash costs incurred on staff changes during the year. Excluding
these non-recurring items reduces the ratio to 50%.
Non-compensation costs comprise expenses incurred in the normal
course of business, the most significant of which relate to
technology, information systems, market data, brokerage, clearing
and exchange fees.
6. Earnings per share
Basic earnings per share is calculated on a profit after tax of
GBP26,399,000 (2015: GBP21,549,000) and 112,255,294 (2015:
110,757,969) ordinary shares being the weighted average number of
ordinary shares in issue during the year. 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.
The calculations exclude shares held by the Employee Benefit
Trusts on behalf of the Group and shares held in Treasury.
2016 2015
Number Number
Thousands Thousands
------------------------------ ---------- ----------
Weighted average number
of ordinary shares in issue
during the year - basic 112,255 110,758
Dilutive effect of share
awards 5,755 6,867
------------------------------ ---------- ----------
Diluted number of ordinary
shares 118,010 117,625
------------------------------ ---------- ----------
7. Dividends
2016 2015
GBP'000 GBP'000
-------------------------------- -------- --------
Final dividend for year
ended 30 September 2015
(6.00p) 6,713
Interim dividend for year
ended 30 September 2016
(5.50p) 6,148
Final dividend for year
ended 30 September 2014
(5.50p) 6,072
Interim dividend for year
ended 30 September 2015
(5.50p) 6,067
-------------------------------- -------- --------
Distribution to equity holders
of Numis Corporation Plc 12,861 12,139
-------------------------------- -------- --------
The Board has proposed a final dividend of 6.5p per share for
the year ended 30 September 2016. This has not been recognised as a
liability of the Group at the year end as it has not yet been
approved by the shareholders. These preliminary results do not
reflect this dividend payable.
8. Balance sheet items
(a) Property, plant and equipment
The Group's offices in London underwent a program of
refurbishment during 2015. This work was largely completed in 2015
and has resulted in increased depreciation charges in 2016.
(b) Deferred tax
As at 30 September 2016 deferred tax assets totalling
GBP1,666,000 (2015: GBP1,995,000) have been recognised reflecting
managements' confidence that there will be sufficient levels of
future taxable gains against which the deferred tax asset can be
utilised. The deferred tax asset principally comprises amounts in
respect of share based payments. A deferred tax asset of GBP457,000
(2015: GBP919,000) relating to unrelieved trading losses incurred
has not been recognised as there is insufficient supportable
evidence within the relevant legal entity that there will be
taxable gains in the future against which the deferred tax asset
could be utilised.
(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 GBP7,670,000 (2015:
GBP5,430,000).
(d) Trading investments
Included within trading investments is GBP29,832,000 (2015:
GBP25,393,000) of investments held outside of the market making
portfolio. The majority of the increase year-on-year results from
fair value improvements rather than new investments.
As at 30 September 2016 no trading investments had been pledged
to institutions under stock lending arrangements (2015: nil).
(e) Stock borrowing and lending collateral
The Group enters stock borrowing and lending arrangements with
certain institutions which are entered into on a collateralised
basis with securities or cash advanced or received as collateral.
Under such arrangements a security is purchased or sold with a
commitment to return it at a future date at an agreed price.
The securities purchased are not recognised on the balance sheet
whereas the securities sold remain on the balance sheet with the
transaction treated as a secured loan made for the purchase or sale
price. Where cash has been used to effect the purchase or sale, an
asset or liability is recorded on the balance sheet as stock
borrowing or lending collateral at the amount of cash collateral
advanced or received.
Where trading investments have been pledged as security these
remain within trading investments and the value of the security
pledged disclosed separately except in the case of short-term
highly liquid assets with an original maturity of 3 months or less,
which are reported within cash and cash equivalents with the value
of security pledged disclosed separately.
(f) Financial liabilities
Financial liabilities comprise short market making positions and
include shares listed on the LSE Main and AIM markets as well as
overseas exchanges. In conjunction with the long market making
positions included within Trading investments, these two combined
represent the net position of holdings within the market making
book which, year on year, reduced to GBP7.0m as at 30 September
2016 (2015: GBP26.0m). The magnitude of financial liabilities will
depend, in part, on the nature and make-up of long positions
combined with the market makers' view of those long positions over
the short and medium term, taking into consideration market
volatility, liquidity, client demand and future corporate
actions.
(g) Cash and cash equivalents
Cash balances reflect increased levels of revenue and operating
profit whilst maintaining dividend distributions (GBP12.9m cash
outflow) and the repurchase of shares into Treasury and the
Employee Benefit Trust (GBP6.7m cash outflow).
9. Reconciliation of profit before tax to cash flows from operating activities
2016 2015
GBP000 GBP000
------------------------------------ --------- ----------
Profit before tax 32,531 26,082
Net finance income (37) (190)
Depreciation charges on property,
plant and equipment 1,126 882
Amortisation charges on intangible
assets 125 111
Share scheme charges 6,229 4,104
Decrease/(increase) in current
asset trading investments 9,168 (10,367)
(Increase)/decrease in trade
and other receivables (10,476) 137,285
(Increase)/decrease in stock
borrowing collateral (3,079) 2,526
Increase)/(decrease) in trade
and other payables 17,744 (149,368)
Decrease/(increase) in derivatives 67 (70)
Cash flows from operating
activities 53,398 10,995
------------------------------------ --------- ----------
Cash flows in 2016 benefitted from increased revenue and lower
net trading book positions. There were no material new investments
made outside the market making book during 2016 whereas 2015 saw
two material investments relating to Crowdcube and seed funding
provided to the FP Numis Mid Cap Fund.
10. Adjusted profit measure in prior year
The following table reconciles the previously reported adjusted
profit before tax and adjusted profit after tax measures to their
IFRS equivalent as presented on the face of the consolidated income
statement:
2015
GBP'000
--------------------------- --------
Adjusted group profit
before tax reported in
2015 32,726
Other operating expense (1,978)
Share scheme charges and
associated NI (4,666)
Group profit before tax 26,082
--------------------------- --------
Adjusted group taxation (5,098)
Tax impact of adjustments 565
--------------------------- --------
Group taxation (4,533)
Group profit after tax 21,549
--------------------------- --------
We have dispensed with the use of non-IFRS profit measures in
order to bring the presentation of our results in-line with best
practice.
Previously the Group excluded amounts relating to share based
payments and net gains/ losses generated from the strategic
investment portfolio in the computation of the adjusted profit
measures. This no longer reflects management's view of an
appropriate measure of the performance of the business.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMMGZRVRGVZM
(END) Dow Jones Newswires
December 07, 2016 02:00 ET (07:00 GMT)