Numis Corporation - Half-year Report
05/05/2023 07:00
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RNS Number : 4918Y Numis Corporation PLC 05 May 2023
2023 Interim Results
5 May 2023: Numis Corporation Plc (Numis) today announces unaudited interim
results for the period ended 31 March 2023.
Alex Ham and Ross Mitchinson, Co-Chief Executive Officers at Numis, said:
"We are pleased that our business continues to perform resiliently despite the
persistence of the unfavourable market conditions that have been a feature of
the investment banking sector for the past 12 months or so. Diversification
has been the foundation of our comparative resilience throughout this down
cycle and this has been demonstrated by record revenues in our advisory
business. This diversity also allows for us to maintain a focus on total
shareholder returns through cycles with the interim dividend maintained at
6.0p per share."
"Whilst capital markets volumes are likely to remain relatively low over the
near term, we have started to see emerging indications that the second half
may see relatively better conditions. Irrespective of the market environment,
the financial position of the Group remains resilient and our capital position
strong."
Financial Highlights
· Revenue of £63.8m, down 14% compared to prior period as market
activity remained subdued
· Profit Before Tax (PBT) of £6.0m, down 55%, due to the operational
gearing in the business
· Investment banking revenues declined 12% as low capital markets
activity was partially offset by record performance in our advisory business
o Advisory revenues up 40% year-on-year, with average fees up 204% compared
to H1 FY22 and we are starting to build a broader pipeline of M&A
transactions
o Capital markets revenues down 52% as UK ECM volumes dropped to a 10-year
low
· Equities revenues down 17% as weak Q2 trading performance offset
market share gains
· Resilient shareholder returns; interim dividend of 6.0p consistent
with the prior year, and a further £4.4m spent on share repurchases
· Balance sheet position remains robust; strong liquidity and capital
positions maintained despite prolonged period of unfavourable conditions
Strategic Highlights
· On 28 April the Board of Numis and the Management Board of Deutsche
Bank AG announced that they have reached agreement on the terms of a
recommended all-cash offer by Deutsche Bank AG for the entire issued and to be
issued share capital of Numis. Further details relating to the timetable of
the Offer will be announced in due course.
Outlook
General macro-economic sentiment continues to weigh on the outlook for the
investment banking industry. Against that backdrop, our advisory business
continues to perform well and has good pipeline of both buy-side and sell-side
mandates for a range of clients reflecting our growing reputation in M&A
and our progress in creating a proposition that delivers through market
cyclicality. Capital markets volumes are likely to remain relatively low.
However, there are some emerging indications that the historic lows we have
recently experienced may give way to better conditions in the second half.
Key statistics
Financial highlights H1 2023 H1 2022 Change
Revenue £63.8m £74.2m (14)%
Underlying operating profit £5.6m £14.0m (60)%
Profit before tax £6.0m £13.4m (55)%
Diluted EPS 4.3p 14.6p (71)%
Cash £99.7m £111.5m (11)%
Net assets £179.6m £190.8m (6)%
Operating highlights
Corporate clients 166 183 (9)%
Average market cap of clients £1.0bn £1.2bn (18)%
Revenue per head £381k £457k (17)%
Operating margin 8.8% 18.9% (10.1)ppts
Spend on share repurchases £4.4m £6.5m (33)%
Note: Revenue, underlying operating profit, operating margin and revenue per
head all exclude investment gains and losses.
Contacts
Numis:
Noreen Biddle-Shah, Head of Communications 020 7260 1441
FTI Consulting LLP:
Edward Bridges
07768 216607
Daisy Hall
07807 298568
Grant Thornton UK LLP (Nominated Adviser):
Philip Secrett 020 7728 2578
Harrison Clarke 020 7184 4384
Notes for editors
Numis (LON: NUM) is an international investment bank that partners with some
of the most ambitious companies and investors, offering strategic advice,
unique insights and connectivity to the capital markets.
Already a leader in the UK market, Numis is the adviser of choice for many
listed companies, including one-fifth of the FTSE 350 index(( 1 )), with an
average market capitalisation of £1.0bn(( 2 )), and has acted on the most UK
IPOs over the past decade.
Since 2016, Numis has diversified its strategy to grow its UK M&A
franchise, expand internationally and develop its private markets business,
which combined now represent more than half of Numis' investment banking
revenues(( 3 )).
Numis is listed on London's AIM and has offices in London, New York and
Dublin.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 (as it forms part of domestic law
of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018).
Forward-looking statements
This announcement contains forward-looking statements. Forward-looking
statements sometimes use words such as 'may', 'will', 'could', 'seek',
'continue', 'aim', 'anticipate', 'target', 'project', 'expect', 'estimate',
'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar
meaning. Past performance is no guide to future performance and any
forward-looking statements and forecasts are based on current expectations and
assumptions but relate to events and depend upon circumstances in the future
and you should not place reliance on them. These statements and forecasts are
subject to various risks and uncertainties and there are a number of factors
that could cause actual results or developments to differ materially from
those expressed or implied by forward-looking statements and forecasts.
The forward-looking statements contained in this document speak only as of the
date of this announcement and (except as required by applicable regulations or
by law) Numis does not undertake to publicly update or review any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Nothing in this announcement constitutes or should be construed as
constituting a profit forecast.
No offer of securities
The information, statements and opinions contained in this announcement do not
constitute or form part of, and should not be construed as, any public offer
under any applicable legislation, or an offer, or solicitation of an offer, to
buy or sell any securities or financial instruments in any jurisdiction, or
any advice or recommendation with respect to any securities or financial
instruments.
Business review
The first half of our financial year has seen a continuation of the
unfavourable market backdrop and, in the case of capital markets, we have
experienced a deterioration in deal volumes relative to the comparative
period. Consequently, our revenues for the half decreased 14% to £63.8m
(2022: £74.2m) and Underlying operating profit decreased 60% to £5.6m (2022:
£14.0m). Profit before tax was £6.0m (2022: £13.4m) and included £0.5m
of gains recognised on investments held outside of our market making business
(2022: £0.4m gain). Our net assets decreased 6% over the period to
£179.6m, and similarly our liquidity position was marginally lower but
remains strong; cash balances were £99.7m (2022: £111.5m).
Market conditions
Throughout the first half equity markets remained fragile. Inflation concerns
and rising interest rates remained firmly in focus for both our institutional
and corporate clients. Investor sentiment toward the UK generally remained
weak with domestic focused institutional investors experiencing persistent
fund outflows. Despite the challenging backdrop, UK markets optically
performed relatively well with the FTSE 100 and FTSE 250 up 11% and 10%
respectively.
However, the improved performance of UK indices was not matched by a
corresponding increase in ECM activity. UK ECM volumes remained at 10 year
lows, declining 62% against a weak comparative period. The IPO market
remains effectively closed although there are some early indications of
potential recovery in activity toward the end of 2023. Private markets have
also been impacted by the broader slowdown in capital markets; however, there
remains a significant amount of dry powder among venture and growth equity
investors globally.
Whilst M&A volumes also declined across the period, activity levels have
been generally more resilient compared to capital markets, particularly in the
UK mid-market where valuations of listed companies remain attractive
notwithstanding some recovery in market levels.
Investment banking
H1 2023 H1 2022 %
£m £m change
Capital markets 11.9 24.7 (52)%
Advisory 24.2 17.2 40%
Corporate retainers 6.1 6.1 0.0%
Investment banking revenue 42.2 48.0 (12)%
The investment banking division delivered revenue of £42.2m (2022: £48.0m)
for the first half, representing a decline of 12% relative to H1 FY22 which
benefitted from the tail end of the post-COVID recovery.
During the first half we continued to build on the successful diversification
of our investment banking business, delivering a record first half advisory
revenue performance. M&A revenues have benefited from continued momentum
in securing financial adviser mandates from our corporate broking client base.
The strength of our offering has been demonstrated by further progress in
growing our average M&A deal fee. Average M&A fees were up 204%
compared to H1 FY22 and we are starting to build a broader pipeline of M&A
transactions beyond bid defence for our corporate broking clients.
The strong advisory performance was offset by a weaker capital markets
performance where revenues were down more than 50%. Whilst our ECM market
share in the UK has increased relative to the comparative period, overall
market levels of issuance declined further during the half. For example, the
first half of FY23 featured no IPOs whereas we completed 4 IPOs in the
comparative period last year.
Growth capital solutions, our private markets business, has experienced a
pick-up in deal activity and pipeline development. Whilst revenues were lower
than the first half of FY22, the performance represented an improvement on the
subdued H2 FY22 performance. Our track record in this structural growth market
leaves us well positioned to capitalise on a further recovery in activity.
Our International ECM strategy continues to advance. We are now distributing
UK deals to EU institutional clients across both public and private markets,
and we have completed ECM transactions for EU issuers in the period.
The decline in corporate clients to 166 was attributable to elevated levels of
mid-market takeovers. During the half, 9 clients were lost due to transactions
which more than offset the wins in the period. Retainer fee income stayed
consistent at £6.1m (2022: £6.1m).
Growing the corporate client list is a strategic priority. We will remain
disciplined, and focused on those opportunities where we can leverage the
combined strength of our investment banking and equities platforms. Whilst
activity levels amongst our corporate client base, across all products, was
near the lower end of our long-term historic range, corporate clients
generated 88% of investment banking deal fee revenues in the period
demonstrating the embedded value of the franchise.
Equities
H1 2023 H1 2022 %
£m £m change
Institutional income 17.4 19.6 (11)%
Trading 4.2 6.5 (36)%
Equities revenue 21.6 26.1 (17)%
Equities delivered revenue of £21.6m for the first half, representing a
decline of 17% relative to the comparative period. Following a good start to
the year, revenues were impacted by a materially weaker trading performance in
the second quarter which led to a 36% decline in trading gains for the first
half.
Institutional income was down 11% compared to H1 FY22 and in line with the
second half of FY22. The research payment component of this revenue line
remains consistent with prior periods demonstrating the continued strength of
our research offering and stability of our institutional relationships.
Whilst investor sentiment remained cautious we continued to offer high levels
of service and proactive engagement to our institutional clients. We
expanded our European client base during the period, in line with the strategy
to enhance our distribution capability beyond the UK and support our EU ECM
marketing efforts.
Investment portfolio
Overall, the portfolio achieved a gain of £0.5m and is now valued at £17.7m
representing approximately 10% of group net assets. The portfolio faced
valuation headwinds as the higher interest rate environment led to continued
pressure on the ratings of listed growth businesses. In addition the weakening
of the US Dollar over the period adversely impacted valuations. As a result,
the majority of the holdings incurred write downs during the half. However,
the aggregate write down was more than offset by the upward re-valuation of
Wiz following completion of their funding round in February 2023. This
transaction was led by our growth capital solutions team and demonstrates the
strategic benefit of aligning our investment portfolio with our private
markets activities.
Administrative expenses
H1 2023 H1 2022 %
£m £m change
Staff costs 33.3 36.0 (8)%
Share-based payments 3.2 3.0 6%
Non-staff costs 21.7 21.1 3%
Total administrative costs 58.2 60.1 (3)%
Half-Year headcount 338 325 4%
Average headcount 335 324 3%
Compensation ratio 57.2% 52.6% 4.6ppts
Total costs for the period reduced by 3% to £58.2m (2022: £60.1m) due to
lower variable compensation reflecting the lower operating performance in the
period. During the first half we made a small number of headcount reductions
in certain areas of the business whilst maintaining our focus on investing in
strategic growth areas. Post the period end we also closed our Electronic
Trading business reflecting our assessment that this product was not core to
our long term strategy.
Our share based payment charge increased 6% due to a slightly higher equity
component to the prior year variable compensation round. The compensation
ratio increased as a function of the lower revenue performance but remains
well within our through the cycle target range. New regulations governing the
remuneration of certain senior staff came into effect on 1 January requiring a
greater proportion of variable compensation to be delivered in the form of
equity.
Non-staff costs increased 3% due to higher technology and market data costs as
well as investment in our international strategy.
Capital and liquidity
The financial position of the Group remains extremely resilient
notwithstanding the prolonged weakness in capital markets activity. We
continue to operate significantly in excess of our regulatory capital and
liquidity requirements with sufficient capacity to support our long term
shareholder return strategy. During such periods of market uncertainty, our
balance sheet position enables sustained investment in the platform as well as
providing reassurance and stability to our clients and employees.
The business has operated IFPR since 1 January 2022 and we remain in a
transition period, whereby our overall capital requirement will remain
consistent with the previous regime until the FCA completes its review of our
internal assessment.
Our liquidity position remains robust with cash balances of £99.7m, 11% lower
than the position at the end of FY22. The decline was attributable to variable
compensation payments related to the prior year, which were partially offset
by short-term cash movements associated with trading and settlement
activities.
Dividends and shareholder returns
In accordance with the dividend policy the Board has declared an interim
dividend of 6.0p per share. The dividend will be paid on 23 June 2023 to
shareholders on the register on 19 May 2023.
The share count remains broadly in line with the comparative period end
pursuant to our strategy to offset the dilutive impact of share awards though
buybacks. During the half, on-market purchases of shares totalling £2.6m have
been executed. This is supplemented by tax offset purchases by the EBT upon
the vesting of share awards which totalled £1.8m during the period.
On this occasion, the Company will not be offering shareholders the option to
participate in the dividend reinvestment plan ("DRIP").
Current trading and outlook
Whilst capital markets volumes are likely to remain relatively low over the
near term, we have started to see emerging indications that the second half
will see relatively better conditions. Irrespective of the market environment,
the financial position of the Group remains resilient and our capital position
strong.
Consolidated income statement
Unaudited for the 6 months ended 31 March 2023
6 months ended 31 March 2023 6 months ended 31 March 2022 Year ended
Unaudited Unaudited 30 September 2022
Audited
Note £'000 £'000
£'000
Revenue 3 63,788 74,153 144,229
Other operating income/loss 4 543 442 (1,432)
Total income 64,331 74,595 142,797
Administrative expenses 5 (58,205) (60,146) (123,716)
Operating profit 6,126 14,449 19,081
Finance income 6 2,047 8 3,906
Finance costs 6 (2,157) (1,032) (2,131)
Profit before tax 6,016 13,425 20,856
Taxation (1,118) 3,357 (7,153)
Profit for the period 4,898 16,782 13,703
Attributable to:
Owners of the parent 4,898 16,782 13,703
Earnings per share
Basic 7 4.5p 15.1p 12.4p
Diluted 7 4.3p 14.6p 11.9p
Consolidated statement of comprehensive income
Unaudited for the 6 months ended 31 March 2023
6 months ended 31 March 2023 6 months ended 31 March 2022 Year ended
Unaudited Unaudited 30 September 2022
Audited
£'000 £'000
£'000
Profit for the period 4,898 16,782 13,703
Items that may be reclassified to the Income Statement on fulfilment of
specific conditions:
Exchange differences on translation of foreign operations (1,227) 85 1,051
Items that will not be reclassified to the Income Statement:
Excess of tax deduction over cumulative share scheme charges 5,058
Other comprehensive income for the period, net of tax (1,227) 85 6,109
Total comprehensive income for the period, net of tax, attributable to owners 3,671 16,867 19,812
of the parent
Consolidated balance sheet
Unaudited as at 31 March 2023
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 8,780 10,086 9,458
Intangible assets 199 442 275
Right-of-use assets 33,592 36,515 35,400
Deferred tax 9a 1,711 2,987 1,354
44,281 50,030 46,487
Current assets
Trade and other receivables 9b 373,219 280,226 403,416
Trading investments 9c 61,964 55,512 36,071
Stock borrowing collateral 9d 23,834 26,378 20,354
Current income tax receivable 4,657 10,185 10,792
Derivative financial instruments - 216 22
Cash and cash equivalents 9f 99,724 111,513 105,653
563,399 484,031 576,309
Current liabilities
Trade and other payables 9b (354,560) (267,616) (385,720)
Trading instruments 9e (31,782) (35,031) (10,340)
Lease liabilities (1,434) (504) (605)
(387,776) (303,151) (396,665)
Net current assets 175,622 180,880 179,644
Non-current liabilities
Lease liabilities (40,264) (40,091) (40,910)
Net assets 179,639 190,819 185,221
Equity
Share capital 5,718 5,718 5,718
Capital redemption reserve 534 534 534
Other reserves 7,127 6,683 10,641
Retained earnings 166,260 177,884 168,328
Total equity 179,639 190,819 185,221
Consolidated statement of changes in equity
Unaudited for the 6 months ended 31 March 2023
Share Capital redemption Other Retained Total
Capital reserve reserves earnings equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 October 2022 5,718 534 10,641 168,328 185,221
Comprehensive income for the period - - (1,227) 4,898 3,671
Dividends paid - - - (8,206) (8,206)
Net movement in Treasury shares - - - (2,618) (2,618)
Movement in respect of employee share plans - - (2,288) 3,717 1,429
Deferred tax related to share-based payments - - - 142 142
Transactions with shareholders - - (2,288) (6,966) (9,253)
Balance at 31 March 2023 5,718 534 7,127 166,260 179,639
Share Capital redemption Other Retained Total
capital reserve reserves earnings equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 October 2021 6,252 - 9,037 171,437 186,726
Comprehensive income for the period - - 85 16,782 16,867
Treasury shares cancelled (534) 534 - - -
Dividends paid - - - (8,943) (8,943)
Net movement in Treasury shares - - - (3,183) (3,183)
Movement in respect of employee share plans - - (2,439) 2,353 (86)
Deferred tax related to share-based payments - - - (562) (562)
Transactions with shareholders (534) 534 (2,439) (10,335) (12,774)
Balance at 31 March 2022 5,718 534 6,683 177,884 190,819
For the year ended 30 September 2022
Share Capital redemption Other Retained Total
capital reserve reserves earnings equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 October 2021 6,252 - 9,037 171,437 186,726
Comprehensive income for the year - - 1,051 18,761 19,812
Treasury shares cancelled (534) 534 - - -
Dividends paid - - - (15,580) (15,580)
Net movement in Treasury shares - - - (8,183) (8,183)
Movement in respect of employee share plans - - 553 2,442 2,995
Deferred tax related to share-based payments - - - (549) (549)
Transactions with shareholders (534) 534 553 (21,870) (21,317)
Balance at 30 September 2022 5,718 534 10,641 168,328 185,221
Consolidated statement of cash flows
Unaudited for the 6 months ended 31 March 2023
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Cash flows generated from operating activities 10 1,577 (2,794) 7,902
Taxation recovered/(paid) 4,800 (3,200) (7,164)
Interest received in relation to operating activities 1,959 8 436
Net cash generated from operating activities 8,336 (5,986) 1,174
Investing activities
Purchase of property, plant and equipment (274) (910) (1,114)
Purchase of intangible assets - (13) (19)
Net cash used in investing activities (274) (923) (1,133)
Financing activities
Purchases of own shares - Treasury (2,619) (3,183) (8,183)
Purchases of own shares - Employee Benefit Trust (1,776) (3,359) (3,385)
Cash paid in respect of lease arrangements - principal (308) (263) (555)
Interest paid (718) (287) (537)
Dividends paid (8,206) (8,943) (15,580)
Net cash used in financing activities (13,626) (16,035) (28,240)
Net movement in cash and cash equivalents (5,564) (22,944) (28,199)
Opening cash and cash equivalents 105,653 134,125 134,125
Net movement in cash and cash equivalents (5,564) (22,944) (28,199)
Exchange movements (365) 332 (273)
Closing cash and cash equivalents 99,724 111,513 105,653
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 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 significant
judgements and estimates applied by the Group in these results have been
applied on a consistent basis with the statutory accounts for the year ended
30 September 2022. 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 interim 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 interim 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
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
Numis Corporation Plc transitioned to UK-adopted International Accounting
Standards in its consolidated financial statements on 1 October 2021. This
change constitutes a change in accounting framework. However, there is no
impact on recognition, measurement or disclosure in the period reported as a
result of the change in framework.
The consolidated financial information contained within these financial
statements has been prepared in accordance with UK-adopted International
Accounting Standards with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards and are in accordance
with the accounting policies that were applied in the Group's statutory
accounts for the year ended 30 September 2022.
There are no new mandatory standards, amendments or interpretations for the
Group's and the Company's interim accounting period ended 31 March 2023.
As at the date of authorisation of the financial statements, there were no
relevant standards, amendments or interpretations to existing standards not
yet effective, which have been early adopted by the Group.
2. Segmental Reporting
Geographical information
The Group earns its revenue in the following geographical locations:
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
United Kingdom 57,967 69,892 137,056
United States of America 4,303 4,261 7,141
Republic of Ireland 1,518 - 32
Revenue (see note 3) 63,788 74,153 144,229
The following is an analysis of the carrying amount of non-current assets
(excluding deferred tax assets) by the geographical area in which the assets
are located:
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
United Kingdom 40,299 44,682 42,225
United States of America 2,107 1,999 2,584
Republic of Ireland 164 361 323
Total non-current assets 42,570 47,043 45,132
Geographical information is based on the location of the contracting legal
entity.
3. Revenue
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Net trading gains 4,161 6,478 12,764
Institutional income 17,444 19,633 37,314
Equities income 21,605 26,111 50,078
Corporate retainers 6,116 6,111 12,395
Advisory fees 24,204 17,246 39,023
Capital markets fees 11,863 24,685 42,733
Investment banking revenue 42,183 48,042 94,151
Total revenue 63,788 74,153 144,229
4. Other operating income/(loss)
Other operating income represents net gains/losses made on investments which
are held outside of the market-making portfolio, which are disclosed within
Trading Investments.
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Investment activity net gains/(losses) 543 442 (1,432)
5. Administrative expenses
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Wages and salaries 27,327 29,901 62,089
Social security costs 3,654 4,668 9,204
Pension costs 1,072 986 2,106
Share-based payments 3,206 3,025 6,345
Other staff costs 1,228 456 1,547
Total staff costs 36,488 39,036 81,290
Depreciation of property, plant and equipment 927 873 1,731
Depreciation of right-of-use assets 1,609 1,554 3,063
Amortisation of intangible assets 76 129 302
Other non-staff costs 19,104 18,554 37,330
Total non-staff costs 21,717 21,110 42,426
Total administrative expenses 58,205 60,146 123,716
The average number of employees during the period increased to 335 (31 March
2022: 324). Compensation costs as a percentage of revenue increased to 57%
(30 September 2022: 56%).
Other non-staff 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. Finance income / Finance costs
Finance income 6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Interest income 2,047 8 477
Net foreign exchange gains - - 3,429
Total finance income 2,047 8 3,906
Finance costs 6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Interest expense 277 174 495
Interest expense on lease liabilities 776 791 1,636
Net foreign exchange losses 1,105 67 -
Total finance costs 2,157 1,032 2,131
Interest income comprises interest on cash balances. Net foreign exchange
gains/losses relate to activities in the normal course of business and
investments held in foreign currencies.
Interest expense comprises amounts paid on overdrawn balances with clearing
institutions and costs associated with the stand-by RCF facility. Interest
expense on lease liabilities relates to leases accounted for under IFRS 16.
7. Earnings per share
Basic earnings per share is calculated on a profit after tax of £4,898,000
(31 March 2022: £16,782,000) and 108,950,605 (31 March 2022: 111,295,087)
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 or loss per share from continuing operations attributable to the equity
holders.
The calculations exclude shares held by the Employee Benefit Trust on behalf
of the Group and shares held in Treasury.
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
Number Number Number
Thousands Thousands Thousands
Weighted average number of ordinary shares in issue during the year - basic 108,951 111,295 110,730
Dilutive effect of share awards 3,690 3,529 4,233
Diluted number of ordinary shares 112,641 114,824 114,963
8. Dividends
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Final dividend for year ended 30 September 2021 (8.00p) - 8,943 8,943
Interim dividend for year ended 30 September 2022 (6.00p) - - 6,637
Final dividend for year ended 30 September 2022 (7.5p) 8,206 - -
Distribution to equity holders of Numis Corporation Plc 8,206 8,943 15,580
The Board has approved an interim dividend of 6.0p per share (2022: interim
6.0p per share). This dividend will be payable on 23 June 2023 to shareholders
on the register of members at the close of business on 19 May 2023. These
results do not reflect this dividend payable.
9. Balance sheet items
(a) Deferred tax
As at 31 March 2023 deferred tax assets totalling £1.7m (30 September 2022:
£1.4m) have been recognised reflecting management's 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, unutilised trading losses of
overseas affiliates and unrealised losses on the investment portfolio.
(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 £12.7m (30 September 2022: £18.9m).
(c) Trading investments
Included within trading investments is £17.7m (30 September 2022: £18.4) of
unlisted investments held outside of the market making portfolio. During the
interim period there were no new investment purchases or disposals with the
fair value net decrease of £(0.7)m attributable as FX losses of £(1.2)m and
net portfolio revaluation £0.5m.
As at 31 March 2023 no trading investments had been pledged to institutions
under stock borrowing arrangements (30 September 2022: 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.
(e) Trading instruments
Trading instruments 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.
(f) Cash and cash equivalents
Cash balances reflect movement in market making positions, the operating
performance of the business offset by dividend distributions (£8.2m cash
outflow) and share buy-backs through the repurchase of shares into Treasury
and the Employee Benefit Trust (£4.4m cash outflow).
At 31 March 2023, the Group had a £50m unsecured Revolving Credit Facility
('RCF') with Barclays and AIB. The facility was undrawn at reporting date.
10. Reconciliation of profit before tax to cash flows from operating
activities
6 months ended 6 months ended Year ended
31 March 2023 31 March 2022 30 September 2022
Unaudited Unaudited Audited
£000 £000 £000
Profit before tax 6,016 13,425 20,856
Net finance costs/(income) 110 1,024 (1,775)
Disposals of property, plant and equipment - - 11
Depreciation charges on property, plant and equipment 927 873 1,731
Depreciation charges on right-of-use assets 1,561 1,554 3,063
Amortisation charges on intangible assets 76 129 302
Share scheme charges 3,205 3,025 6,345
(Increase)/decrease in trading investments (6,109) 3,460 7,050
Decrease in trade and other receivables 25,166 187,573 72,571
(Increase) in stock borrowing collateral (3,526) (7,755) (1,731)
(Decrease) in trade and other payables (25,871) (206,516) (101,129)
Decrease in derivatives 22 413 606
Cash flows from operating activities 1,577 (2,794) 7,902
1 Corporate client base includes 64 companies out of the FTSE 350. - Numis
data (31 March 2023).
2 Average market capitalisation of corporate client base £1.0bn. - Numis
data (31 March 2023).
3 As at half year end 2023. - Numis data (31 March 2023).
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