TIDMNUM
RNS Number : 4856Y
Numis Corporation PLC
06 December 2017
Numis Corporation Plc Preliminary Results
for the year ended 30 September 2017
London, 6 December 2017: Numis Corporation Plc ("Numis") today
announces preliminary results for the year ended 30 September
2017.
Highlights
2017 2016 Change
Revenue GBP130.1m GBP112.3m +16%
-------------------------- ------------ ------------ -------
Total income GBP133.5m GBP116.1m +15%
-------------------------- ------------ ------------ -------
Profit before tax GBP38.3m GBP32.5m +18%
Earnings per share 27.4p 23.5p +17%
-------------------------- ------------ ------------ -------
Total dividend for the
year 12.0p 12.0p -
-------------------------- ------------ ------------ -------
Cash balances GBP95.9m GBP89.0m +8%
-------------------------- ------------ ------------ -------
Net assets GBP133.6m GBP129.1m +4%
-------------------------- ------------ ------------ -------
-- Revenue up 16% to GBP130.1m, a record high for the Group with
Equities revenue up 17% to GBP44.8m and Corporate Broking and
Advisory ("CB&A") revenue up 15% to GBP85.3m.
-- Profit before tax up 18% to GBP38.3m, including GBP3.4m of
net gains on our strategic investment portfolio.
-- Earnings per share up 17% to 27.4p.
-- Total dividend for the year maintained at 12.0p (2016: 12.0p)
whilst cash outflows in respect of share repurchases hit record
highs totalling GBP22.9m (2016: GBP6.7m).
-- Our best-in-class research, sales and execution services were
recognised in the Thomson Reuters Extel survey, in which we were
ranked No 1 UK Small & Mid Cap Brokerage Firm for the 5(th)
year in a row.
-- Completed 101 transactions which included equity fund raises
totalling GBP2.5 billion (up 33% on prior year), 37 advisory
transactions for our corporate clients, and 17 block trades in
aggregate totalling GBP0.9 billion. Our corporate client list
continues to grow and now stands at 202 companies with an average
market capitalisation of GBP726m, up 28% year-on-year.
Alex Ham and Ross Mitchinson, Co-Chief Executive Officers,
said:
"Following a strong second half, we are delighted to announce
that Numis has generated record full year revenues in both its
Equities and Corporate Broking and Advisory businesses. Our deal
pipeline is strong and we remain determined to support ambitious
companies of all sizes seeking capital and high quality advice to
grow, whilst simultaneously investing in our people, platform and
relationships. Trading in our new financial year has started well
and gives us confidence as we head into 2018. This is testament to
our exceptional colleagues and the excellent relationships that we
enjoy with both our corporate and institutional clients."
Contacts:
Numis Corporation:
Alex Ham & Ross Mitchinson, Co-Chief Executives 020 7260 1245
Brunswick:
Nick Cosgrove 020 7404 5959
Simone Selzer 020 7404 5959
Grant Thornton UK LLP (Nominated Adviser):
Philip Secrett 020 7728 2578
Jen Clarke 020 7865 2411
Harrison J Clarke 020 7184 4384
Notes for Editors
Numis, the holding company of Numis Securities Limited, 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 2017, revenues increased by
16% to GBP130.1m (2016: GBP112.3m) and profit before tax increased
by 18% to GBP38.3m (2016: GBP32.5m). Profit before tax includes
GBP3.4m of gains recognised on investments held outside of our
market making business (2016: GBP3.8m). Our balance sheet remains
strong with cash balances totalling GBP95.9m (2016: GBP89.0m) while
net assets have increased to GBP133.6m (2016: GBP129.1m).
Market Conditions
Market conditions provided a positive backdrop for trading in UK
equities overall. Steadily rising UK equity indices coupled with
relatively low volatility resulted in secondary trading by value on
the London Stock Exchange growing almost 16% year-on-year and
equity fund raising activity increasing 14%. These favourable
conditions contributed, in part, to both a significant uplift in
equity issuance revenue delivered by our Corporate Broking and
Advisory business, and a strong performance by our Equities
business which maintained or improved its ranking across most
sectors of the market. We also saw a return of M&A activity
during our second half as the relative weakness of Sterling
combined with availability of cheap finance fuelled activity in our
corporate client base which prompted good volumes of both advisory
and capital raising mandates in the year.
Corporate Broking & Advisory ("CB&A")
It is a key part of our culture to build long-term relationships
with our corporate clients, endeavouring to provide them with
service of exceptional quality which is tailored to their needs. We
pride ourselves on the strength of these relationships, which we
believe is reflected in the momentum that we enjoy both in client
numbers, as well as longevity of relationship and in fee generation
over time.
Revenue from CB&A activities totalled GBP85.3m (2016:
GBP73.9m) being the highest in the Group's history. This
performance was broadly based and included 7 IPOs, 38 secondary
fund raises, 37 pure advisory roles and 17 block trades and
secondary sell-downs. Importantly, transaction volumes in
non-primary activity increased to 94 (2016: 73) reflecting the
quality of our client base. Our market share of UK ECM activity
remains impressive and we were ranked #1 in the UK ECM league
tables for the calendar year to 30 September 2017.
We continue to attract high quality corporate clients in order
to offset inevitable departures resulting from M&A and ended
the year with 202 companies for whom we act as broker. The average
market capitalisation of our corporate client base has grown by 28%
year-on-year and now stands at GBP726m but it is important to
recognise that the median is GBP322m and we that we remain
committed to the small cap space. This is reflected in our client
wins during the year, which have included businesses from GBP20m
market cap to well over GBP1bn market cap. During the year we rose
to #1 ranked Broker overall by total number of stock market clients
and remain ranked #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
Luceco, Premier Asset Management, Sherborne Investors and Alfa
Financial along with secondary raises for our corporate clients
including INPP, Learning Technologies Group, Bluefield Solar Income
Fund, Accesso, IP Group and John Menzies. In addition, we raised
GBP377m through private placements for Accelerated Digital Ventures
and Klarna and now act as financial advisor to two unquoted
companies. In total, we raised GBP2.5bn of equity capital during
the year (2016: GBP1.9bn).
Our corporate advisory capabilities continue to grow. We
completed 37 pure advisory roles during the period including the
acquisition by the McColl's Retail Group of 298 stores from the
Co-operative Group, John Menzies acquisition of ASIG, the
recommended offer by Madison Dearbom Partners for Powerflute, the
GBP332m recommended offer by Altrad Investment Authority for Cape
Plc and Micro Focus' $8.8bn merger with Hewlett Packard's
Enterprise's Software business segment.
We have also built up a strong track record in the successful
execution of block trades and secondary sell downs. During the
year, we executed 17 such transactions with an aggregate value of
GBP0.9bn which included a GBP321m sell down for Countryside
Properties and a GBP206m sell down for Forterra Plc.
Against a backdrop of an ever deeper and more developed pool of
capital that is happy to own unlisted securities, we continue to
develop our private placement capabilities through our growing
Venture Broking team. This is an exciting growth area, which plays
well to our strengths and our desire to play a key role in
developing the capital markets which support this segment of the
market.
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 360 companies across 16 sectors, whilst our
Investment Funds research team covers around 360 investment
companies and funds. Our highly regarded sales team provides a
service to more than 500 active institutional clients across the
UK, Europe, the Americas and Australia. Data from Starmine and the
various alpha capture systems continue to demonstrate the
impressive value we add to our institutional clients.
Our US office continues to provide a best-in-class service in
marketing UK equities to major North American institutional
investors, including managing a significant number of roadshows and
reverse roadshows. Our distribution offering also extends to the
Private Client Fund Managers ("PCFM") through our PCFM team, who
access a network of over 3,000 active fund managers at 200 PCFM
houses in the UK, who collectively can be a powerful pool of
liquidity.
We provide execution services in over 700 stocks, of which over
500 are listed on the Main Market of the London Stock Exchange.
During the year we had #1 market share in 122 stocks (FY 2016: 127)
across these markets, and were a top 3 provider in a further 85
stocks (FY 2016: 92). With access to multiple trading venues and
liquidity providers, we are able to deliver an exceptionally strong
execution capability to our institutional clients.
Combined institutional commission and trading revenues for the
year were impressive, totalling GBP44.8m (2016: GBP38.4m), an
increase of 17%, surpassing the Group's previous record level
achieved in 2014. This was achieved against a backdrop of generally
positive markets and the continued threat from electronic trading
systems and dark pools of liquidity.
Our well-resourced market-making and sales-trading teams ensure
that we are well placed to source liquidity on behalf of our
institutional clients, which often requires skill and human effort
that cannot be found in a dark pool or standalone electronic
trading venue. The 12% year-on-year growth in institutional
commissions was achieved despite changes to institutional broker
payment models as they look to embrace MiFID II, which is due to be
implemented in January 2018. Our trading revenues saw a 39%
year-on-year increase and were achieved with levels of capital
usage that were only moderately higher than prior year.
Costs and People
Administrative expenses for the year totalled GBP95.4m (2016:
GBP83.6m). Compensation costs as a percentage of revenue have shown
a modest increase to 53% (2016: 52%). This is wholly attributable
to an increase in share award related charges which, in part,
reflects the increase in the Company's share price over the year
ended 30 September 2017 but also share awards granted towards the
end of 2016.
Non-compensation costs comprise expenses incurred in the normal
course of business, the most significant of which relate to
technology, information systems, market data, brokerage, clearing
and exchange fees and occupancy. The year-on-year increase of
GBP1.7m (7%) was driven mainly by investment in our technology
platform, MiFID II and other regulatory project work together with
increased secondary market activity which directly impacts
brokerage, clearing and exchange fees.
Average headcount increased to 220 (2016: 213) and we ended the
year with a headcount of 235 (2016: 220). We continue to prioritise
investment in and support of our talent pool in order to develop
our staff at all levels of the organisation. This focus was, we
believe, instrumental in Numis being voted #1 UK Small & Mid
Cap Brokerage Firm by both companies and institutions for the fifth
year in succession in the 2017 Thomson Reuters Extel Survey.
Strategic Investments
The value of our strategic investments total GBP28.1m (2016:
GBP29.8m). Of this value, GBP14.0m is in quoted securities, whilst
GBP14.1m is invested in unquoted securities. The movement during
the year reflects new investments and follow-on funding totalling
GBP1.3m, disposals totalling GBP5.8m and GBP2.8m of net fair value
uplifts of which the majority came from our quoted securities.
Disposals during the year were in respect of quoted holdings and
reflect the fact that we do not view Numis as a natural long term
investor in quoted companies. However, we continue to believe the
majority of our unquoted investments are complementary to our
existing business and that they offer an exciting opportunity for
the Group to grow its presence in areas in which it has expertise
or a relevant network of investors. We will explore opportunities
for re-cycling the portfolio where we see attractive investment
propositions which are strategically relevant.
Financial Position
Our balance sheet strengthened further during the year, with
cash balances totalling GBP95.9m (2016: GBP89.0m), while net assets
have increased to GBP133.6m (2016: GBP129.1m). Cash flows in 2017
benefitted from increased revenue and a net divestment of our
strategic investment portfolio. These movements were offset by an
increase in outflows relating to annual incentive payments and the
absence of any material movement in the market making positions
which generated material inflows in 2016. Operational cash inflows
of GBP50.4m (2016: GBP53.4m) enabled a combined outflow to
shareholders through dividends and share buy-backs of GBP36.4m
(2016: GBP19.6m) which is at its highest level in the Group's
history.
Our regulatory capital requirement, including regulatory
buffers, sits at around GBP60m. 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. During 2017 we spent GBP22.9m
(2016:GBP6.7m) buying back our own shares. At a minimum, our
buyback program will continue in order to avoid the prospective
dilutive impact attached to unvested share awards.
Dividend and Shareholder Returns
The Board's intention is to use earnings and cash flow to
underpin shareholder returns, through a combination of dividends
and share buybacks. Our goal is to pay a stable ordinary dividend
and re-invest in our platform, pursue selective growth
opportunities and return excess cash to shareholders subject to
capital and liquidity requirements and market outlook. In view of
this approach and, in particular, the cash allocated to share
repurchases during the course of the year, the Board is
recommending a final dividend of 6.5p per share (2016: 6.5p per
share) which results in a total dividend for the year of 12.0p per
share (2016: 12.0 per share).
Over the medium term, we intend not only to repurchase shares to
offset the dilutive impact of unvested share awards, but to reduce
the overall number of shares in issue as we focus on overall
shareholder returns.
Board Changes
On 21 March 2017, Alan Carruthers succeeded Gerald Corbett as
Non-Executive Chairman. On 8 May 2017, Oliver Hemsley retired from
the Board following the succession of the Chief Executive Offer
role which completed in September 2016, eight months earlier.
Oliver founded the business in the early 1990's and built it over
25 years to become one of the leading broking and advisory firms in
the UK. He remains with the Company in an advisory capacity.
Two further changes occurred during the year, namely that Lorna
Tilbian (Executive Director) and Marcus Chorley (Executive
Director) both stood down from the Board with effect from 30
September 2017. Lorna has decided to leave the Company after more
than sixteen years of service and leaves the business on 31
December 2017. Marcus remains within the business in his role as
Chairman of Equities and continues to serve on the board of Numis
Securities Limited.
One further prospective change was announced in July 2017,
namely that Simon Denyer (Finance Director) will be leaving the
business in January 2018. He will be succeeded by Andrew Holloway
whose details were included in the announcement of 28 July 2017.
The Board is enormously grateful to both Simon and Lorna for the
significant contribution they have each made to the development and
success of Numis. We also thank Marcus for his service to the Board
and look forward to his continuing valued contribution to the
Equities business.
The cumulative result of these changes is that the balance
between Executive and Non-Executive Directors is restored to that
seen prior to the start of our Chief Executive succession process
whilst maintaining the necessary oversight and experience
required.
Current Trading and Outlook
"Our new financial year has started well as we have benefited
from the momentum we experienced in the second half of 2017. We
have completed 11 fund raises to-date, a number of M&A
transactions and revenue from the Equities business is currently
ahead of the 2017 daily run-rate.
Our deal pipeline is strong and we remain determined to support
ambitious companies of all sizes seeking capital and high quality
advice to grow, whilst simultaneously investing in our people,
platform and relationships. Whilst we cannot predict the direction
of the market or the health of the equity issuance environment,
there is good momentum in the business and we look forward to the
future with confidence."
Alex Ham & Ross Mitchinson
Co-Chief Executives
6 December 2017
Consolidated Income Statement
FOR THE YEARED 30 SEPTEMBER 2017
2017 2016
Note GBP'000 GBP'000
------------------------ ---- -------- --------
Revenue 3 130,095 112,335
Other operating income 4 3,431 3,759
------------------------ ---- -------- --------
Total income 133,526 116,094
Administrative expenses 5 (95,395) (83,600)
------------------------ ---- -------- --------
Operating profit 38,131 32,494
Finance income 293 427
Finance costs (105) (390)
------------------------ ---- -------- --------
Profit before tax 38,319 32,531
Taxation (7,942) (6,132)
Profit after tax 30,377 26,399
------------------------ ---- -------- --------
Attributable to:
Owners of the parent 30,377 26,399
------------------------ ---- -------- --------
Earnings per share
Basic 6 27.4p 23.5p
Diluted 6 25.9p 22.4p
Dividends 7 (13,473) (12,861)
------------------------ ---- -------- --------
Consolidated Statement of Comprehensive Income
FOR THE YEARED 30 SEPTEMBER 2017
2017 2016
GBP'000 GBP'000
------------------------------------ ------- -------
Profit for the year 30,377 26,399
Exchange differences on translation
of foreign operations 21 630
Other comprehensive income for
the year, net of tax 21 630
Total comprehensive income for
the year, net of tax, attributable
to owners of the parent 30,398 27,029
------------------------------------- ------- -------
Consolidated Balance Sheet
AS AT 30 SEPTEMBER 2017
2017 2016
Note GBP'000 GBP'000
----------------------------- ----- ---------- ----------
Non current assets
Property, plant and
equipment 2,998 3,734
Intangible assets 33 122
Deferred tax 8a 3,116 1,666
----------------------------- ----- ---------- ----------
6,147 5,522
Current assets
Trade and other receivables 8b 255,933 170,490
Trading investments 8c 47,424 48,453
Stock borrowing collateral 8d 8,606 3,901
Derivative financial
instruments 35 616
Cash and cash equivalents 8f 95,852 89,002
----------------------------- ----- ---------- ----------
407,850 312,462
Current liabilities
Trade and other payables 8b (254,799) (173,031)
Financial liabilities 8e (19,875) (12,293)
Current income tax (5,697) (3,571)
(280,371) (188,895)
Net current assets 127,479 123,567
----------------------------- ----- ---------- ----------
Non current liabilities
Deferred tax 8a - (12)
Net assets 133,626 129,077
----------------------------- ----- ---------- ----------
Equity
Share capital 5,922 5,922
Share premium 8g - 38,854
Other reserves 13,416 8,238
Retained earnings 114,288 76,063
----------------------------- ----- ---------- ----------
Total equity 133,626 129,077
----------------------------- ----- ---------- ----------
Consolidated Statement of Changes in Equity
FOR THE YEARED 30 SEPTEMBER 2017
Share Share Other Retained Total
Capital Premium Reserves Earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- --------- --------- --------- ---------
Balance at 1 October
2016 5,922 38,854 8,238 76,063 129,077
Profit for the year 30,377 30,377
Other comprehensive
income 21 - 21
--------------------------------- -------- --------- --------- --------- ---------
Total comprehensive
income for the year - - 21 30,377 30,398
--------------------------------- -------- --------- --------- --------- ---------
Share premium cancellation (38,854) 38,854 -
Dividends paid (13,473) (13,473)
Net movement in Treasury
shares (17,238) (17,238)
Movement in respect
of employee share plans 5,157 (546) 4,611
Deferred tax related
to share based payments 251 251
Transactions with shareholders - (38,854) 5,157 7,848 (25,849)
--------------------------------- -------- --------- --------- --------- ---------
Balance at 30 September
2017 5,922 - 13,416 114,288 133,626
--------------------------------- -------- --------- --------- --------- ---------
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
--------------------------------- -------- -------- --------- --------- ---------
Consolidated Statement of Cash Flows
FOR THE YEARED 30 SEPTEMBER 2017
2017 2016
Note GBP'000 GBP'000
---------------------------- ----- --------- ---------
Cash flows from operating
activities 9 50,410 53,398
Interest paid (14) (182)
Taxation paid (7,027) (4,481)
---------------------------- ----- --------- ---------
Net cash from operating
activities 43,369 48,735
Investing activities
Purchase of property,
plant and equipment (493) (346)
Purchase of intangible
assets - -
Interest received 295 430
Net cash (used in)/from
investing activities (198) 84
Financing activities
Purchases of own shares
- Treasury (19,588) (3,719)
Purchases of own shares
- Employee Benefit Trust (3,298) (3,000)
Dividends paid (13,473) (12,861)
---------------------------- ----- --------- ---------
Net cash used in financing
activities (36,359) (19,580)
Net movement in cash
and cash equivalents 6,812 29,239
---------------------------- ----- --------- ---------
Opening cash and cash
equivalents 89,002 59,591
Net movement in cash
and cash equivalents 6,812 29,239
Exchange movements 38 172
---------------------------- ----- --------- ---------
Closing cash and cash
equivalents 95,852 89,002
---------------------------- ----- --------- ---------
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 2017
will be delivered to the Registrar of Companies in due course. The
annual report and statutory accounts will be posted to shareholders
on 2 January 2018 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 6 February 2018.
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 2016 and 30 September 2015. 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 2016.
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:
2017 2016
GBP'000 GBP'000
---------------- ---------- ----------
United Kingdom 119,867 102,684
United States 10,228 9,651
130,095 112,335
---------------- ---------- ----------
There are no clients who accounted for more than 10% of revenues
in the year ended 30 September 2017 (2016: 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:
2017 2016
GBP'000 GBP'000
---------------- -------- --------
United Kingdom 2,982 3,744
United States 49 112
3,031 3,856
---------------- -------- --------
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.
2017 2016
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Net institutional income 44,799 38,419
Total corporate transaction revenues 73,718 64,293
Corporate retainers 11,578 9,623
-------------------------------------------------------- -------- --------
Revenue from Corporate Advisory & Broking (see note 3) 130,095 112,335
Strategic investment activity net gains 3,431 3,759
Contribution from investing activities 3,431 3,759
-------------------------------------------------------- -------- --------
Total 133,526 116,094
-------------------------------------------------------- -------- --------
Net assets
Corporate advisory & broking 103 2,573
Cash collateral at clearing houses 9,530 7,670
Investing activities 28,141 29,832
Cash balances 95,852 89,002
-------------------------------------------------------- -------- --------
Total net assets 133,626 129,077
-------------------------------------------------------- -------- --------
3. Revenue
2017 2016
GBP'000 GBP'000
--------------------------- ---------- ----------
Net trading gains 9,047 6,496
Institutional commissions 35,752 31,923
---------------------------- ---------- ----------
Net institutional
income 44,799 38,419
Corporate retainers 11,578 9,623
Advisory fees 16,471 16,261
Placing commissions 57,247 48,032
---------------------------- ---------- ----------
130,095 112,335
--------------------------- ---------- ----------
4. Other operating income
Other operating income represents net gains made on investments
which are held outside of the market making portfolio. The majority
of the net gain recorded in 2017 reflects price movements and
dividend income in respect of quoted holdings.
5. Administrative expenses
2017 2016
GBP'000 GBP'000
------------------------ --------- ---------
Wages and salaries 48,171 43,651
Social security costs 8,160 6,592
Compensation for loss
of office 132 487
Other pension costs 2,082 1,923
Share based payments 10,454 6,229
Non compensation costs 26,396 24,718
95,395 83,600
------------------------ --------- ---------
The average number of employees during the year increased to 220
(2016: 213) with the number as at 30 September 2017 totalling 235
(30 September 2016: 220). Compensation costs as a percentage of
revenue have increased to 53% (2016: 52%) and on a per head basis
show a 13% increase year-on-year. The per head variable pay
component has increased 29% whereas the fixed cost component has
risen just 1%. The increase in the variable pay component was
partly driven by share price appreciation but also by shares awards
granted towards the end of 2016.
Non-compensation costs comprise expenses incurred in the normal
course of business, the most significant of which relate to
technology, information systems, market data, brokerage, clearing
and exchange fees. Investment relating to regulatory requirements
and in respect of our platform continue to impact such costs.
6. Earnings per share
Basic earnings per share is calculated on a profit after tax of
GBP30,377,000 (2016: GBP26,399,000) and 110,919,356 (2016:
112,255,294) 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.
2017 2016
Number Number
Thousands Thousands
------------------------------ ---------- ----------
Weighted average number
of ordinary shares in issue
during the year - basic 110,919 112,255
Dilutive effect of share
awards 6,328 5,755
------------------------------ ---------- ----------
Diluted number of ordinary
shares 117,247 118,010
------------------------------ ---------- ----------
7. Dividends
2017 2016
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 2016
(6.50p) 7,308
Interim dividend for year
ended 30 September 2017
(5.50p) 6,165
-------------------------------- -------- --------
Distribution to equity holders
of Numis Corporation Plc 13,473 12,861
-------------------------------- -------- --------
The Board has proposed a final dividend of 6.5p per share for
the year ended 30 September 2017. 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.
The final dividend for 2017 will be payable on 9 February 2018
to shareholders on the register of members at the close of business
on 15th December 2017, subject to shareholder approval at the
Annual General Meeting on 6th February 2018. 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 2017
Annual Report and Accounts, which will be circulated to all
shareholders on 2nd January 2018.
8. Balance sheet items
(a) Deferred tax
As at 30 September 2017 deferred tax assets totalling
GBP3,116,000 (2016: GBP1,666,000) 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
GBP1,104,000 (2016: GBP457,000) 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.
(b) 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 GBP9,530,000 (2016:
GBP7,670,000).
(c) Trading investments
Included within trading investments is GBP28,141,000 (2016:
GBP29,832,000) of investments held outside of the market making
portfolio. Net fair value increases amounting to GBP2.8m and
dividend income of GBP0.4m were offset by net disposals of
GBP4.9m.
As at 30 September 2017 no trading investments had been pledged
to institutions under stock borrowing arrangements (2016: nil).
(d) 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. An asset is recorded on the balance sheet as stock borrowing
collateral at the amount of cash collateral advanced.
On the rare occasion 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.
(e) Financial liabilities
Financial liabilities comprise short market making positions and
include shares listed on the London Stock Exchange Main Market and
quoted on the AIM market 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 GBP0.6m short as at 30 September 2017 (2016: GBP7.0m
long). 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.
(f) Cash and cash equivalents
Cash balances reflect increased levels of revenue and operating
profit whilst maintaining dividend distributions (GBP13.5m cash
outflow) and share buy-backs through the repurchase of shares into
Treasury and the Employee Benefit Trust (GBP22.9m cash
outflow).
(g) Share premium account
At a general meeting held on 30 August 2017 shareholders passed
a special resolution approving the cancellation of the entire
amount standing to the credit of the share premium account, subject
to confirmation by the High Court. On 20 September 2017 the
confirmation from the High Court was issued, the share premium
account was cancelled and an amount of GBP38,853,868 was credited
to a distributable reserve.
9. Reconciliation of profit before tax to cash flows from operating activities
2017 2016
GBP000 GBP000
------------------------------------ --------- ---------
Profit before tax 38,319 32,531
Net finance income (188) (37)
Depreciation charges on property,
plant and equipment 1,226 1,126
Amortisation charges on intangible
assets 89 125
Share scheme charges 10,454 6,229
Decrease in current asset
trading investments 1,029 9,168
Increase in trade and other
receivables (85,583) (10,476)
Increase in stock borrowing
collateral (4,705) (3,079)
Increase in trade and other
payables 89,188 17,744
Decrease in derivatives 581 67
Cash flows from operating
activities 50,410 53,398
------------------------------------ --------- ---------
Cash flows in 2017 benefitted from increased revenue and a net
divestment of our strategic investment portfolio. These movements
were offset by an increase in outflows relating to annual incentive
payments and the absence of any material movement in the market
making positions which generated material inflows in 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MMMGZRKLGNZM
(END) Dow Jones Newswires
December 06, 2017 02:00 ET (07:00 GMT)
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