TIDMNUM
RNS Number : 5557M
Numis Corporation PLC
12 May 2020
Numis Corporation Plc
Half Year Results
for the six months ended 31 March 2020
London, 12 May 2020: Numis Corporation Plc ("Numis") today
announces unaudited interim results for the period ended 31 March
2020.
Highlights
-- Resilient business performance despite volatile market
conditions during the 6 month period ending with the unprecedented
impact of COVID-19
-- Investment Banking revenues down 5% due to lower deal volumes in line with the UK market
-- Equities revenue increased 55% reflecting higher market
activity levels and strong trading gains
-- Market declines at the end of the period resulted in GBP1.9m
write down of the Investment portfolio
-- All business lines fully operational with all staff working from home
-- Resilient returns; dividend maintained at 5.5p and GBP5.5m spent on share repurchases
-- Strong balance sheet; cash position materially higher and undrawn credit facility
Key statistics
Financial highlights H1 2020 H1 2019 Change
------------------------------- ---------- ---------- ----------
Revenue GBP63.1m GBP55.7m 13.3%
------------------------------- ---------- ---------- ----------
Underlying Operating profit GBP9.1m GBP8.1m 12.4%
------------------------------- ---------- ---------- ----------
Profit before tax GBP7.3m GBP7.1m 2.1%
------------------------------- ---------- ---------- ----------
EPS 6.0p 5.4p 11.2%
------------------------------- ---------- ---------- ----------
Cash GBP95.3m GBP78.9m 20.9%
------------------------------- ---------- ---------- ----------
Net assets GBP136.7m GBP140.2m (2.5)%
------------------------------- ---------- ---------- ----------
Operating highlights
------------------------------- ---------- ---------- ----------
Corporate clients 209 214 (2.3)%
------------------------------- ---------- ---------- ----------
Average market cap of clients GBP692m GBP836m (17.2)%
------------------------------- ---------- ---------- ----------
Revenue per head (annualised) GBP449k GBP401k 12.0%
------------------------------- ---------- ---------- ----------
Operating margin 14.5% 14.6% (0.1)ppts
------------------------------- ---------- ---------- ----------
Spend on share repurchases GBP5.5m GBP7.5m (26.2)%
------------------------------- ---------- ---------- ----------
Notes:
1) Revenue, Underlying Operating profit, Operating margin and
Revenue per head all exclude investment income / losses
2) Basic EPS
Alex Ham and Ross Mitchinson, Co-Chief Executive Officers,
said:
"During these unprecedented times our priority has been
protecting our staff and continuing to support our clients in such
difficult circumstances. We are proud of the commitment
demonstrated by our people and grateful for their efforts in
ensuring our business activities suffered no disruption and our
quality of service remains uncompromised.
Over many years we have built an enviable corporate client base.
Many of these companies are now facing significant challenges as a
result of COVID-19 and our support for a number of these businesses
in recent weeks has included raising equity to provide additional
liquidity headroom in response to the disruption they are
suffering. Our near term performance will likely be determined by
the frequency of these deals given the immediate headwinds facing
M&A, IPOs and other corporate transactions.
Whilst the pandemic is currently dominating markets, this event
will eventually pass and the strength of our balance sheet ensures
we can continue to focus on our long term strategic priorities. Our
stability and consistency has underpinned our ability to capture
market share gains through difficult market environments in the
past and we expect to emerge from this challenging period with our
business in a strong position."
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
Jen Clarke 020 7865 2474
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 280 staff in London and
New York.
Business review
Overall performance
Numis delivered good revenue growth against an unpredictable
market backdrop which proved beneficial for our equities business
but our Investment Banking division was impacted by lower deal
volumes. Overall, revenues increased 13% to GBP63.1m (2019:
GBP55.7m) and Underlying Operating profit increased 12% to GBP9.1m
(2019: GBP8.1m). Profit before tax was in line with the comparative
period and includes GBP1.9m of losses recognised on investments
held outside of our market making business (2019: GBP1.4m loss).
Our balance sheet remains resilient, and our liquidity position
strengthened over the period in response to the market environment;
cash balances increased by 21% to GBP95.3m (2019: GBP78.9m).
Market conditions
Equity markets experienced a dramatic and largely unprecedented
6 month period, the FTSE 100 and FTSE250 were down 23.4% and 24.3%
respectively.
The three month period ended 31 December 2019 featured subdued
equity markets and weak corporate activity in advance of the UK
General Election. Subsequently markets delivered strong gains and
UK equity market activity improved significantly. However, there
was insufficient opportunity for deal flow to recover in response
to the General Election result as the second quarter was swiftly
dominated by the COVID-19 pandemic which caused an unprecedented
decline in global markets and extraordinary volatility levels.
Transaction volumes across both ECM and M&A declined
significantly through the second quarter as a result. ECM remains
our largest revenue contributor and whilst market volumes in the
comparative period were particularly weak relative to historic
levels, this 6 month period witnessed volumes decline a further
10%.
During the final weeks of the period we started to see ECM
issuance increase as a result of companies responding to liquidity
stresses created by COVID-19. We expect this trend to continue,
however the near term outlook for M&A and Private markets
transactions will likely remain challenging.
Investment Banking
H1 2020 H1 2019 %
GBPm GBPm Change
--------------------------- ------- ------- -------
Capital Markets 22.8 24.9 (8.1)%
--------------------------- ------- ------- -------
Advisory 7.2 7.5 (4.2)%
--------------------------- ------- ------- -------
Corporate retainers 6.8 6.4 6.0%
--------------------------- ------- ------- -------
Investment Banking revenue 36.9 38.8 (5.0)%
--------------------------- ------- ------- -------
Leveraging our market expertise to provide insightful advice to
our corporate clients during this difficult period has been our
priority. In parallel we continue to advance our strategic
priorities through selective hiring to diversify our business and
develop our sector capabilities. Our private markets business
performed well in the first quarter, continuing the positive
momentum from the prior year, and our debt advisory service has
proved valuable in guiding our clients through their financing
analysis in recent weeks.
Investment Banking revenue for the 6 months to 31 March 2020 was
5% lower than the first half of the prior year. Notwithstanding the
cautious market environment leading up to the General Election the
year started positively with an improvement in average deal fees
leading to a strong performance in the first quarter. Whilst this
improvement has been sustained across the period, the second
quarter suffered from a decline in deal volumes as COVID-19
concerns significantly impacted the pipeline.
Capital markets revenues declined 8% as a result of lower market
volumes and the weakest period for IPOs since 2012. The weak
environment for public markets issuance was partially offset by an
improvement in our private markets revenue contribution where we
completed 6 deals in the period. In the near term we expect public
markets activity to improve, prompted by an increase in corporate
recapitalisations.
Advisory revenues were down 4% reflecting lower M&A volumes
in the UK market over the period. Our M&A pipeline was building
ahead of the second quarter however COVID-19 has caused a material
decline in the near term. Despite the short term headwinds we
continue to believe M&A represents a significant growth
opportunity for Numis and we intend to leverage our evolving sector
specialisation to improve the number of financial adviser mandates
won from our corporate client base.
Retainer fee income increased 6% relative to the comparative
period. Overall client numbers declined marginally over the period
as we continue to actively rotate the client base. The average
market capitalisation of the clients won was approximately five
times higher than of those lost in the period reflecting our
continued focus on strengthening the corporate client base and
targeting those businesses which we believe will be active and
offer revenue generating opportunities.
Equities
H1 2020 H1 2019 %
GBPm GBPm change
--------------------- ------- ------- -------
Institutional income 19.7 16.5 19.2%
--------------------- ------- ------- -------
Trading 6.5 0.4 n.m.
--------------------- ------- ------- -------
Equities revenue 26.2 16.9 55.5%
--------------------- ------- ------- -------
Equities delivered a strong performance over the half benefiting
from the market share gains achieved in recent years, and the
increase in market activity levels. Electronic trading was launched
during the period and is delivering a growing contribution to our
institutional income. The quality of our research offering, which
has received further investment over the past couple of years,
provides our institutional clients with a differentiated, high
quality service which is invaluable in periods of such severe
market disruption. We believe our market position and reputation as
a leading UK equities platform will be enhanced through our
performance and service in this environment.
Institutional income, which comprises execution commission and
payments for research, increased 19% compared to the first half of
the prior year. Execution commission benefitted from an increase in
market activity post the General Election, and thereafter the
extreme market volatility levels underpinned a strong performance
in the second quarter. Research fees have been in line with
expectations.
Trading delivered gains materially ahead of the comparative
period which included the GBP3m loss associated with the
underwriting of the Kier rights issue. In response to the
heightened market volatility toward the end of the period we
reduced our trading book positions, however this has not impacted
profitability levels. Our standing in the market as a leading
provider of liquidity in small and mid-cap equities, together with
our long standing relationships, ensures we are well positioned to
support our institutional clients in volatile markets.
Investment portfolio
Our investment portfolio is currently valued at GBP13.0m. The
portfolio comprises a combination of operating companies and funds,
with approximately 40% of the portfolio value held in funds or
diversified investment vehicles. Whilst our portfolio is almost
entirely private investments, these are not immune to the severe
valuation declines we have seen across the public markets in recent
months. As a result most of our investments have been subject to
write downs attributable to the recent performance of equity
markets. Overall the write down over the period amounted to GBP1.9m
representing approximately 13% of the portfolio valuation at the
start of the period. There were no disposals or new investments in
the period. Given the diversified nature of the portfolio, should
there be any recovery in public market indices in the second half
we would expect the portfolio valuation to benefit.
Costs and people
H1 2020 H1 2019 %
GBPm GBPm Change
--------------------------- ------- ------- -------
Staff costs 31.0 24.7 25.7%
--------------------------- ------- ------- -------
Share-based payments 6.0 5.5 8.3%
--------------------------- ------- ------- -------
Non-staff costs 17.0 17.4 (2.3)%
--------------------------- ------- ------- -------
Total administrative costs 54.0 47.6 13.5%
--------------------------- ------- ------- -------
Period end headcount 285 279 2.2%
--------------------------- ------- ------- -------
Average headcount 281 278 1.1%
--------------------------- ------- ------- -------
Compensation ratio 58.6% 54.2% 4.4ppts
--------------------------- ------- ------- -------
Average headcount increased by only 1% over the period. Hiring
activity has been focused on Investment Banking hires, particularly
at junior levels, and support roles to safeguard the continued
operational resilience of the business. Given the current market
conditions, and challenges facing clients, our staff are currently
operating at high utilisation rates. We have not furloughed any
staff and have no intention of doing so. Similarly we have not
accessed any of the Government schemes designed to provide
financial support to businesses through this crisis. We expect
future hiring activity, particularly at senior levels, to be
limited in view of the current challenges, however we remain
focused on continuing to advance our strategic priorities over the
longer term.
Overall staff costs were 26% higher than the comparative period.
The increase is mostly attributable to a higher variable
compensation provision reflecting the improved operating
performance of the business. In addition our staff costs for the
period have been adversely impacted by a higher holiday pay accrual
resulting from the current government restrictions.
Our share-based payment charge was GBP6.0m (2019: GBP5.5m), an
increase of 8% compared to the comparable period. This increase is
largely attributable to the higher aggregate equity award to staff
as part of the last annual compensation round. The expense related
to equity awards is generally weighted toward the first year of a
three year term.
Compensation cost as a percentage of revenue has increased
compared to the prior period but remains consistent with the FY19
ratio and within our target range of 50% to 60% which we believe to
be appropriate given the potential for market cycles to
significantly impact revenue performance. We will always target an
appropriate alignment between staff compensation, business
performance and shareholder returns whilst recognising the
prevailing market conditions and outlook.
Non-staff costs are in line with the comparative period. Our
investment in technology infrastructure over recent years
facilitated an efficient transition to remote working for all staff
including the trading floor, and importantly this ensured the
protection of our people. All of our staff are working from home
with minimal disruption to business performance and client service.
In view of the uncertain outlook and our near term priorities, we
have delayed discretionary spend related to a number of projects
and initiatives.
As previously announced we have agreed to enter into a 15 year
lease on new office space at 40 Gresham Street. We previously
expected the lease to commence near the end of the current
financial year with a relocation date early in the second half of
FY21. However work on the Gresham Street building site has been
delayed due to COVID-19 and we are awaiting details regarding the
length of the delay to completion of the building before we can
determine a revised office relocation timetable. As previously
indicated the impact of the higher rent and larger office space
will increase our ongoing property costs by approximately GBP3m
annually, this cost increase will now most likely commence during
the first half of FY21. We have adopted IFRS16 during the period,
given the short duration remaining on our head office lease, the
impact is immaterial.
Capital and Liquidity
The Group's net asset position as at 31 March 2020 was GBP136.7m
representing an immaterial decline of 1% compared to 30 September
2019. We continue to operate significantly in excess of our
regulatory capital requirements and believe this provides the
business with stability, and offers reassurance to our clients and
counterparties in periods of significant uncertainty and
disruption.
Our liquidity position strengthened during the period as we
reduced our market exposure in response to volatility levels. As at
31 March 2020 our cash position was GBP95.3m which was GBP11.1m
higher than the position at 30 September 2019. In addition we have
a revolving credit facility which is currently undrawn. Overall, at
31 March 2020 the Group had committed liquidity available of
GBP130m, representing meaningful underwriting capacity to support
equity issuance for our corporate clients.
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 19 June 2020 to shareholders on the Register on 22 May
2020.
Whilst market conditions have been highly volatile and COVID-19
is presenting many challenges across all sectors, we believe
maintaining our dividend commitment to shareholders is important
and demonstrates our ability to pay a stable ordinary dividend,
whilst pursuing selective growth opportunities, across all market
cycles.
During the period 2.01m shares were repurchased compared to
2.87m shares purchased in the prior period. The majority of
employee share vestings occur during the first half, as a result
the share count typically increases in the first few months of the
year. Our intention is to continue mitigating the dilutive impact
of these awards although the buyback volume may be lower this year
compared to prior years given the extreme market volatility
experienced.
Current trading and outlook
Transaction volumes have increased in recent weeks as corporate
clients accessed the equity markets to complete recapitalisations.
Deals executed since the period end include equity raises for ASOS,
Hyve and Polypipe. Average deal fees have been maintained resulting
in an improved Investment Banking performance since the end of the
first half. Equities has maintained the strong performance levels
achieved in the first half.
Our pipeline of recapitalisation transactions for clients
continues to grow, partially offsetting the decline in M&A,
Private markets and IPO fee opportunities which have generally been
subject to delay or abandoned. The market environment post COVID-19
is difficult to forecast, however we expect the economic outlook
will be challenging and balance sheet repair will continue to be a
priority for many companies.
These market conditions will inevitably present opportunities to
achieve market share gains and build a stronger business in an
evolving competitive landscape, but in the short term we will
continue to prioritise the wellbeing of our staff and support our
clients whilst adopting a cautious approach to costs and
liquidity.
Alex Ham & Ross Mitchinson
Co-Chief Executive Officers
12 May 2020
Consolidated Income Statement
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2020
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------- ------ --------------- ---------- ---------------
Revenue 3 63,104 55,689 111,610
Other operating income 4 (1,904) (1,428) (2,210)
------------------------- ------ --------------- ---------- ---------------
Total income 61,200 54,261 109,400
Administrative expenses 5 (53,973) (47,567) (97,514)
Operating profit 7,227 6,694 11,886
Finance income 6 420 430 684
Finance costs 6 (390) (16) (134)
------------------------- ------ --------------- ---------- ---------------
Profit before tax 7,257 7,108 12,436
Taxation (1,003) (1,396) (3,110)
Profit after tax 6,254 5,712 9,326
------------------------- ------ --------------- ---------- ---------------
Attributable to:
Owners of the parent 6,254 5,712 9,326
------------------------- ------ --------------- ---------- ---------------
Earnings per share 7
Basic 6.0p 5.4p 8.8p
Diluted 5.5p 5.0p 8.1p
Consolidated Statement of Comprehensive Income
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2020
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------- ---------- ---------------
Profit for the period 6,254 5,712 9,326
Exchange differences on translation
of foreign operations 27 8 (96)
--------------------------------------- --------------- ---------- ---------------
Other comprehensive income for
the period, net of tax 27 8 (96)
Total comprehensive income for
the period, net of tax, attributable
to the owners of the parent 6,281 5,720 9,230
--------------------------------------- --------------- ---------- ---------------
Consolidated Balance Sheet
UNAUDITED AS AT 31 MARCH 2020
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
---------------------------------- ------ ---------- ---------- -------------
Non-current assets
Property, plant and equipment 2,418 2,798 2,790
Intangible assets 222 62 80
Right-of-use asset 9a 5,045 - -
Deferred tax 9b 3,194 3,455 3,962
---------------------------------- ------ ---------- ---------- -------------
10,879 6,315 6,832
Current assets
Trade and other receivables 9c 246,151 230,764 187,258
Trading investments 9d 25,367 38,824 38,463
Stock borrowing collateral 9e 10,658 23,853 14,640
Current income tax receivable 1,004 - -
Derivative financial instruments - 967 1,103
Cash and cash equivalents 9g 95,332 78,876 84,202
---------------------------------- ------ ---------- ---------- -------------
378,512 373,284 325,666
Current liabilities
Trade and other payables 9c (236,176) (217,313) (178,613)
Financial liabilities 9f (10,882) (21,261) (14,153)
Lease liabilities 9a (1,925) - -
Current income tax - (804) (1,578)
(248,983) (239,378) (194,344)
Net current assets 129,529 133,906 131,322
---------------------------------- ------ ---------- ---------- -------------
Non current liabilities
Lease liabilities 9a (3,737) - -
---------------------------------- ------ ---------- ---------- -------------
Net assets 136,672 140,221 138,154
---------------------------------- ------ ---------- ---------- -------------
Equity
Share capital 5,922 5,922 5,922
Other reserves 19,755 18,004 20,639
Retained earnings 110,995 116,295 111,593
---------------------------------- ------ ---------- ---------- -------------
Total equity 136,672 140,221 138,154
---------------------------------- ------ ---------- ---------- -------------
Consolidated Statement of Changes in Equity
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2020
Other Retained
Share capital reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --- --------------- ------------------- ------------- ---------
Balance at 1 October 2018 5,922 17,537 119,677 143,136
Profit for the period 5,712 5,712
Other comprehensive income 8 - 8
---------------------------------- --------------- ------------------- ------------- -----------
Total comprehensive income for
the period 8 5,712 5,720
---------------------------------- --------------- ------------------- ------------- -----------
Dividends paid (6,837) (6,837)
Movement in respect of employee
share plans 459 (2,281) (1,822)
Deferred tax related to share
based payments (1,445) (1,445)
Net movement in Treasury shares 1,469 1,469
---------------------------------- --------------- ------------------- ------------- -----------
Transactions with shareholders - 459 (9,094) (8,635)
---------------------------------- --------------- ------------------- ------------- -----------
Balance at 31 March 2019 5,922 18,004 116,295 140,221
---------------------------------- --------------- ------------------- ------------- -----------
Balance at 1 October 2018 5,922 17,537 119,677 143,136
Profit for the year 9,326 9,326
Other comprehensive income (96) - (96)
---------------------------------- --------------- ------------------- ------------- -----------
Total comprehensive income for
the year (96) 9,326 9,230
---------------------------------- --------------- ------------------- ------------- -----------
Dividends paid (12,650) (12,650)
Movement in respect of employee
share plans 3,198 (1,879) 1,319
Deferred tax related to share
based payments (578) (578)
Net movement in Treasury shares (2,303) (2,303)
---------------------------------- --------------- ------------------- ------------- -----------
Transactions with shareholders - 3,198 (17,410) (14,212)
---------------------------------- --------------- ------------------- ------------- -----------
Balance at 30 September 2019 5,922 20,639 111,593 138,154
---------------------------------- --------------- ------------------- ------------- -----------
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
-------------------------------------- --------------- ------------------- ------------- ---------
Consolidated Statement of Cash Flows
UNAUDITED FOR THE 6 MONTHSED 31 MARCH 2020
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- ------ ---------- ---------- -------------
Cash flows from/(used in) operating
activities 10 28,175 (16,817) 391
Interest paid (270) (16) (134)
Taxation paid (3,464) (1,949) (3,005)
--------------------------------------- ------ ---------- ---------- -------------
Net cash from/(used in) operating
activities 24,441 (18,782) (2,748)
Investing activities
Purchase of property, plant and
equipment (212) (155) (714)
Purchase of intangible assets (189) - (47)
Interest received 420 430 684
Net cash from/(used in) investing
activities 19 275 (77)
Financing activities
Purchase of own shares - Employee
Benefit Trust (3,548) (3,457) (7,774)
Purchase of own shares - Treasury (1,953) (4,001) (4,222)
Cash paid in respect of lease
arrangements - principal (922) - -
Cash paid in respect of lease
arrangements - discount (120) - -
Dividends paid (6,787) (6,837) (12,650)
--------------------------------------- ------ ---------- ---------- -------------
Net cash used in financing activities (13,330) (14,295) (24,646)
Net movement in cash and cash
equivalents 11,130 (32,802) (27,471)
--------------------------------------- ------ ---------- ---------- -------------
Opening cash and cash equivalents 84,202 111,673 111,673
Net movement in cash and cash
equivalents 11,130 (32,802) (27,471)
Exchange movements - 5 -
--------------------------------------- ------ ---------- ---------- -------------
Closing cash and cash equivalents 95,332 78,876 84,202
--------------------------------------- ------ ---------- ---------- -------------
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 2019, 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 2019. Although these estimates are based on management's
best knowledge of the amount, event or actions, actual results
ultimately may differ from those of estimates.
These interim financial statements are prepared on the
historical cost basis, except for the revaluation of certain
financial instruments.
These interim financial statements are prepared on a going
concern basis as the directors have satisfied themselves that, at
the time of approving these interim financial statements, the Group
has adequate resources to continue in operational existence for at
least the next twelve months.
During the period, a number of new standards and amendments to
IFRS became effective and were adopted by the Company and the
Group. These included IFRS 16 'Leases'.
IFRS 16 'Leases' brings all material leases on to the balance
sheet with a liability representing future lease payments and an
asset representing right of use. This impacts the Company and the
Group for all its leases that fall within scope of the standard.
All leases have been assessed, and the leases that fall within the
standard will be the property leases that the Company has in place
in London and New York, as well as some equipment leases in New
York. The standard is applicable for the Company's 2020 accounting
year end. The assessment shows that the impact will not be material
to the income statement, although it has introduced material
additional balances to the assets and liabilities of the Company
and the Group. In relation to the property leases that the Company
and Group have in place, where the space is available for use, the
net present value of the remaining lease liabilities, and therefore
also the right of use asset, is approximately GBP5.0m as at the
balance sheet date and the impact on the income statement is
immaterial.
2. Segmental reporting
Geographical information
The Group is managed as an integrated investment banking and
equities business and although there are different revenue types
(which are separately disclosed in note 3) the nature of the
Group's activities is considered to be subject to the same and/or
similar economic characteristics. Consequently the Group is managed
as a single business unit.
The Group earns its revenue in the following geographical
locations:
6 months ended 6 months ended Year ended
30 September
31 March 2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- -------------
United Kingdom 60,358 51,308 106,077
United States of America 2,746 4,381 5,533
63,104 55,689 111,610
-------------------------- --------------- --------------- -------------
The following is an analysis of the carrying amount of
non-current assets (excluding deferred tax assets) by the
geographical area in which the assets are located:
6 months ended 6 months ended Year ended
30 September
31 March 2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- -------------
United Kingdom 4,225 2,359 2,394
United States of America 3,460 501 476
7,685 2,860 2,870
-------------------------- --------------- --------------- -------------
Other information
In addition, the analysis below sets out the income performance
and net asset split between our investment banking and equities
business and the equity holdings which constitute our investment
portfolio.
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------------------- ---------- -------------
Equities income 26,233 16,871 37,325
Corporate retainers 6,811 6,423 13,357
Total corporate transactions revenues 30,060 32,395 60,928
---------------------------------------- ---------------------- ---------- -------------
Revenue (see note 3) 63,104 55,689 111,610
Investment activity net gains (1,904) (1,428) (2,210)
Contribution from investment portfolio (1,904) (1,428) (2,210)
---------------------------------------- ---------------------- ---------- -------------
Total income 61,200 54,261 109,400
---------------------------------------- ---------------------- ---------- -------------
6 months 6 months
Net assets ended ended Year ended
31 March 31 March 30 September
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------- ---------- ---------- -------------
Investment banking and equities activities 28,380 45,820 39,105
Investing activities 12,960 15,525 14,847
Cash and cash equivalents 95,332 78,876 84,202
-------------------------------------------- ---------- ---------- -------------
Total net assets 136,672 140,221 138,154
-------------------------------------------- ---------- ---------- -------------
3. Revenue
6 months ended 6 months ended Year ended
30 September
31 March 2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------- --------------- --------------- -------------
Net trading gains 6,548 359 4,008
Institutional income 19,685 16,512 33,317
--------------------------- --------------- --------------- -------------
Equities income 26,233 16,871 37,325
Corporate retainers 6,811 6,423 13,357
Advisory 7,225 7,541 12,576
Capital markets 22,835 24,854 48,352
--------------------------- --------------- --------------- -------------
Investment banking income 36,871 38,818 74,285
--------------------------- --------------- --------------- -------------
63,104 55,689 111,610
--------------------------- --------------- --------------- -------------
4. Other operating income
Other operating income represents net losses made on investments
which are held outside of the market making portfolio. The losses
reflect price movements on quoted holdings, fair value adjustments
on unquoted holdings and related dividend income. In the period
both our portfolio of unquoted and quoted investments suffered
negative valuation movements. Specifically, downward valuation
adjustments have been made against the unquoted investment
portfolio in relation to the impact from the COVID-19 pandemic.
5. Administrative expenses
6 months ended 6 months ended Year ended
30 September
31 March 2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------- --------------- --------------- -------------
Staff costs 36,999 30,200 64,543
Non-staff costs 16,974 17,367 32,971
53,973 47,567 97,514
----------------- --------------- --------------- -------------
The average number of employees during the period has increased
to 281 (H1 2019: 279). Staff costs excluding share award related
charges have increased by 22.5% compared to the prior period due to
the improved operating performance resulting in higher variable
compensation.
Non-staff costs have decreased by 2.3% compared to the prior
period. Approximately 0.4% of this reduction relates to changes in
classification and treatment of expenses due to IFRS 16, for which
comparatives are not restated.
6. Finance income and Finance costs
Finance income for the period:
6 months ended 6 months ended Year ended
30 September
31 March 2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------- --------------- --------------- -------------
Interest income 226 430 581
Net foreign exchange gains 194 - 74
Other income - - 29
---------------------------- --------------- --------------- -------------
420 430 684
---------------------------- --------------- --------------- -------------
Finance costs for the period:
6 months ended 6 months ended Year ended
30 September
31 March 2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------- --------------- --------------- -------------
Interest expense 390 6 134
Net foreign exchange losses - 10 -
----------------------------- --------------- --------------- -------------
390 16 134
----------------------------- --------------- --------------- -------------
Finance costs have increased in the current financial year due
to the classification of the unwinding of the lease liability
discount as a Finance cost under IFRS16, and additional costs in
relation to the Revolving Credit Facility.
7. Earnings per share
Basic earnings per share is calculated on profits after tax of
GBP6,254,000 (2019: GBP5,712,000) and 104,162,166 (2019:
105,750,034) ordinary shares being the weighted average number of
ordinary shares in issue during the period. Diluted earnings per
share takes account of contingently issuable shares arising from
share scheme award arrangements where their impact would be
dilutive. In accordance with IAS 33, potential ordinary shares are
only considered dilutive when their conversion would decrease the
profit per share or increase the loss per share from continuing
operations attributable to the equity holders. Therefore shares
that may be considered dilutive while positive earnings are being
reported may not be dilutive while losses are incurred.
The calculations exclude shares held by the Employee Benefit
Trust on behalf of the Group and shares held in Treasury.
6 months
6 months ended ended Year ended
31 March 30 September
31 March 2020 2019 2019
Unaudited Unaudited Audited
Number Number Number
Thousands Thousands Thousands
------------------------------------- --------------- ---------- -------------
Weighted average number of ordinary
shares in issue during the period
- basic 104,162 105,750 105,443
Dilutive effect of share awards 8,946 9,114 9,424
------------------------------------- --------------- ---------- -------------
Diluted number of ordinary shares 113,108 114,864 114,867
------------------------------------- --------------- ---------- -------------
8. Dividends
6 months
ended 6 months ended Year ended
31 March 30 September
2020 31 March 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------ ---------- --------------- -------------
Final dividend year ended 30 September
2018 (6.50p) 6,837 6,837
Interim dividend year ended 30 September
2019 (5.50p) 5,813
Final dividend year ended 30 September
2019 (6.50p) 6,787
Distribution to equity holders of
Numis Corporation Plc 6,787 6,837 12,650
------------------------------------------ ---------- --------------- -------------
The Board has approved the payment of an interim dividend of
5.50p per share (2019: interim 5.50p per share). This dividend will
be payable on 19 June 2020 to shareholders on the register of
members at the close of business on 22 May 2020. These financial
statements do not reflect this dividend payable.
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 holds
for its offices in London and New York. This does not include the
lease for our new London office, as that lease is not yet available
for use.
(b) Deferred tax
As at 31 March 2020 deferred tax assets totalling GBP3,194,000
(30 September 2019: GBP3,962,000) 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 GBP8,537,000 (30 September 2019:
GBP12,007,000).
The group has a legally enforceable right and intention to
offset with a clearing house. The amount offset at the period end
was GBP10.2m (30 September 2019: GBP5.0m). The prior period has
been restated to reflect the application of the offsetting rules.
This does not affect the prior period net assets value and there
has been no impact on reported results in either financial
period.
(d) Trading investments
Included within trading investments is GBP12,985,000 (30
September 2019: GBP14,847,000) of investments held outside of the
market making portfolio. The net decrease during the period has
been due to unfavourable valuation movements largely attributable
to the Covid-19 pandemic.
(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 higher than those reported at 31 March 2019
reflecting a reduction of market making positions held, following
the Covid-19 outbreak. Dividend distributions have been maintained
at a similar level to the prior period (GBP6.8m cash outflow). The
repurchase of shares into Treasury and the Employee Benefit Trust
have continued, but at a lower level than the prior period (GBP5.5m
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 $0.9m had been called up and
paid. This is classified within Trading Investments. The remaining
$0.1m has not yet been called and is therefore a commitment until
it is paid over to the fund. The subscription agreement allows that
the investment can be called any time up till the 5th anniversary
of the agreement, which is June 2023.
10. Reconciliation of profit before tax to cash from operating activities
6 months
6 months ended ended Year ended
31 March 30 September
31 March 2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------ --------------- ---------- -------------
Profit before tax 7,257 7,108 12,436
Net finance (income) (30) (414) (550)
Depreciation charge on property,
plant and equipment 584 558 1,124
Depreciation charge on right-of-use
asset 862 - -
Amortisation charge on intangible
assets 47 15 44
Share scheme charges 5,200 5,493 10,914
Decrease in current asset trading
investments 13,096 4,976 5,337
(Increase)/decrease in trade and
other receivables (58,893) 139,506 182,046
Net movement in stock borrowing
collateral 3,982 (15,947) (6,734)
Increase/(decrease) in trade and
other payables 54,292 (157,490) (203,473)
Other balance sheet movements in
respect of leases 676 - -
Decrease/(increase) in derivatives 1,103 (622) (753)
Cash from/(used in) operating activities 28,175 (16,817) 391
------------------------------------------ --------------- ---------- -------------
The increase in cash generated from operating activities during
the six months ended 31 March 2020 reflects a reduction in market
making positions over the period, partially offset by 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.
END
IR SFDFWFESSEEI
(END) Dow Jones Newswires
May 12, 2020 02:00 ET (06:00 GMT)
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