REG - Numis Corporation - Half Year Results

NumisAnnouncement

07/05/2021 07:00

RNS Number : 8469X
  
Numis Corporation PLC
  
07 May 2021
  
 

 Numis Corporation Plc 
Half Year Results 
for the six months ended 31 March 2021
London, 7 May 2021 Numis Corporation Plc ("Numis", "Group" or "Company") today announces unaudited interim results for the period ended 31 March 2021. 
 
Highlights 
·    Strong performance across all business areas delivering a record half year revenue performance 
·    Recovery in UK equity markets and improved investor sentiment provided a favourable market backdrop 
·    Investment Banking revenues more than doubled to £82m 
·    Further strategic progress in building Advisory and Growth Capital Solutions revenues  
·    Equities revenue increased 27% due to consistently strong trading gains and further market share gains with institutional clients
·    Dividend maintained at 5.5p in line with policy and £11.5m spent on share repurchases 
·    Proposed Dublin office offers strategic opportunity to leverage Capital Markets capabilities in Europe 
 




Financial highlights


H1 2021


H1 2020


Change




Revenue


£115.4m


£63.1m


82.9%




Underlying Operating profit


£38.8m


£9.1m


325%




Profit before tax


£39.3m


£7.3m


442%




EPS


25.7p


5.5p


365%




Cash 


£97.6m


£95.3m


2.4%




Net assets


£175.3m


£136.7m


28.2%




 


 


 


 




Operating highlights


 


 


 




Corporate clients


185


189


(2.1)%




Average market cap of clients


£1,341m


£692m


94%




Revenue per head (annualised)


£804k


£449k


79%




Operating margin 


33.6%


14.5%


+19.1ppts




Spend on share repurchases


£11.5m


£5.5m


108%




Notes:
1)        Revenue, Underlying Operating profit, Operating margin and Revenue per head all exclude investment income / losses
2)        Diluted EPS
3)        H1 2020 corporate clients excludes 20 Natural Resources clients given the subsequent exit from the sector 
Alex Ham and Ross Mitchinson, Co-Chief Executive Officers, said:
"Our consistent focus on enhancing the firm's capabilities and strengthening our client relationships has contributed to an excellent and broad-based first half performance. Over the last 12 months we have generated revenues of more than £200m, an outcome we are particularly proud of given the range of expertise and advice demanded by our clients during this period. We also recognise the resilience and dynamism of our colleagues in achieving this performance in challenging circumstances. 
 
Attracting and developing talent will, as always, remain a priority for us as we continue to target long term strategic growth opportunities including the international expansion of our Capital Markets business.
 
Whilst in the current environment there remains some short-term uncertainty, the business has great momentum, and the pipeline is strong.  Execution of our Capital Markets pipeline will be influenced by equity market conditions but the outlook for the second half is encouraging." 
 
 
 
Contacts:
Numis Corporation:                        
Alex Ham & Ross Mitchinson, Co-Chief Executive Officers                       020 7260 1245 
Andrew Holloway, Chief Financial Officer                                                    020 7260 1266 
 
Brunswick:
Nick Cosgrove                                                                                                   020 7404 5959 
Simone Selzer                                                                                                   020 7404 5959 
 
Grant Thornton UK LLP (Nominated Adviser):

Philip Secrett                                                                                                     020 7728 2578

Harrison Clarke                                                                                                 020 7184 4384
 
Notes for Editors
Numis is a leading independent investment banking group offering a full range of research, execution, corporate broking and advisory services to companies in the UK and their investors.  Numis is listed on AIM, and employs approximately 290 staff in London and New York.
 
The information, statements and opinions contained in this announcement do not constitute a public offer under any applicable legislation or an offer to sell or solicit of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
There are a number of key judgement areas, which are based on models and which are subject to ongoing modification and alteration. The reported numbers reflect our best estimates and judgements at the given point in time.
Forward-looking statements 
This announcement contains forward-looking statements. Forward-looking statements sometimes use words such as 'may', 'will', 'seek', 'continue', 'aim', 'anticipate', 'target', 'projected', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'achieve' or other words of similar meaning. Such statements and forecasts involve risk and uncertainty because they are based on current expectations and assumptions but relate to events and depend upon circumstances in the future and you should not place reliance on them. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this announcement. 
Subject to our obligations under the applicable laws and regulations of any relevant jurisdiction, in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Nothing in this announcement constitutes or should be construed as constituting a profit forecast.
 
 

Business review
Numis delivered a record 6 month performance against the backdrop of a recovery in equity markets which benefitted all areas of the business. Overall, revenues increased 83% to £115.4m (2020: £63.1m) and Underlying Operating profit increased substantially to £38.8m (2020: £9.1m) reflecting the positive effect of operational gearing in the business.  Profit before tax was £39.3m representing an increase of more than £30m relative to the comparative period and included £2.0m of gains recognised on investments held outside of our market making business (2020: £1.9m loss).  Our balance sheet remains resilient with net assets of £175.3m, and our liquidity position was maintained despite new office related capital expenditure and higher share repurchase spend; cash balances were £97.6m (2020: £95.3m).   
Market conditions
The 6 month period to 31 March 2021 featured a strong recovery in UK equity markets as positive vaccine newsflow supported consistent gains. In addition, the Brexit deal agreed in December 2020 improved investor sentiment toward the UK. Consequently, the UK has outperformed a number of other markets over the past 6 months and flows into UK equity funds have improved over the period.  The FTSE 100 and FTSE250 were up 14% and 24% respectively over the six months, and whilst there has been a divergence in performance across sectors as a result of the pandemic, the recovery has been beneficial for our business. 
As markets exhibited signs of a sustained recovery, volatility subsided, and corporate confidence returned, the environment for capital markets activity improved significantly.  In particular this allowed the IPO market to function effectively and, as a result, IPO volumes over the past 6 months have been at their strongest level for many years. Overall, UK ECM volumes were materially ahead of the comparative period which was adversely impacted by the start of the pandemic and the pause in deal flow ahead of the UK general election. In addition, UK M&A volumes have started to recover driven by both domestic and international buyers identifying attractive investment opportunities and being able to secure the necessary financing. 
Investment Banking 




 


H1 2021
£m


H1 2020
£m


%
Change




Capital Markets


63.3


22.8


177%




Advisory 


12.4


7.2


72.0%




Corporate retainers


6.3


6.8


(7.6)%




Investment Banking revenue 


82.0


36.9


123%




 
Investment Banking revenue for the 6 months to 31 March 2021 was 123% higher than the first half of the prior year and 27% higher than the second half of FY20 which benefitted from a significant volume of COVID-19 related equity issuance.  In comparison with the strong second half performance of FY20, we delivered an improved revenue performance across multiple products including IPOs, M&A, block trades and Growth Capital Solutions which, in aggregate, more than offset the decline in fund raising activity for our corporate clients. Whilst we have seen diversification by product in the period, there have been certain sectors such as Technology and Digital Consumer which have benefited from an acceleration of certain trends and therefore experienced higher activity levels as a result. Our investment in these sectors over many years, and the strength of our track record, ensured we were well positioned to benefit from the deal flow.
Both transaction volumes and average deal fees increased materially over the period.  Growth in average deal fee has been a key feature of revenue growth in recent years and demonstrates the success of our long-term strategic focus on the corporate client base, our market position in ECM, and a growing contribution from Growth Capital Solutions which generally attracts higher fees. In the recent past around 70% of our deal fee revenue has been sourced from our retained client base, however for this six month period, more than 60% of our deal fee revenue is attributable to clients outside of our retained corporate client base.  This reflects the enhanced reputation of the firm, a broadening range of capabilities and new international revenue opportunities. 
Capital markets revenues almost tripled to £63.3m, led by a strong recovery in IPO volumes. Our consistently strong track record in mid market ECM enabled the firm to establish a leading market share in UK IPOs during this period of elevated activity. Whilst Numis has completed more main market IPOs than any other Investment Bank over the 6 month period, our focus will remain on securing leading roles for high quality issuers. 
In addition to IPOs, Capital Markets revenues have benefited from the continued success of Growth Capital Solutions which has broadened its international network of leading technology disruptors and global investors.    As the private markets continue to operate efficiently and the size of the market opportunity for us is growing we are continuing to invest in headcount and expand the capacity of the team to ensure we remain well positioned to leverage this trend in global capital markets.  
Advisory revenues increased 72% relative to the comparative period reflecting both a recovery in UK M&A volumes, and our investment in sector specialisation and M&A execution capability in recent years. The supportive equity market backdrop has enabled our corporate clients to increasingly assess M&A opportunities, as a result we currently have a good pipeline of M&A mandates across both buy side and sell side which is encouraging for the second half outlook. 
 
Retainer fee income decreased 8% relative to the comparative period due to the strategic decision to exit the Natural Resources sector during FY20 which resulted in a 10% reduction in client numbers.  Excluding the impact of this closure, our client base was broadly flat for the period with client wins largely offset by clients lost to takeovers.  The outlook for new corporate client wins is positive given the increased volume of IPOs will generate a pipeline of new high quality clients which should mitigate the impact of clients lost due to M&A. 
 
The average market capitalisation of the client base continues to increase at a higher rate than growth in market indices.  The average market capitalisation of the clients won was again materially ahead of those lost in the period reflecting our continued focus on strengthening the corporate client base and targeting businesses which we believe will be active and offer the most compelling revenue generating opportunities.
 
 
Equities




 


H1 2021
£m


H1 2020
£m


%
change




Institutional income 


21.9


19.7


11.1%




Trading 


11.5


6.5


75.7%




Equities revenue 


33.4


26.2


27.3%




 
 
Equities delivered growth of 27% relative to the comparative period which benefitted from the extreme volatility caused by the start of the pandemic.  We have continued to focus on ensuring high levels of engagement with institutional clients and demonstrating the value of our experience across research, sales and trading.  
 
During the period we strengthened the equities platform through a small number of selective hires as we continue to refine our offering and target further market share gains. The elevated activity levels across both secondary market volumes and capital markets presents opportunities for us to differentiate our comprehensive service which we believe is recognised and valued by our institutional clients. In addition, the overall strength of the Equities platform has been critical to our recent success in winning IPO mandates which contributed to a strong Investment Banking performance this half.   
 
Institutional income, which comprises execution commission and payments for research, increased 11% compared to the first half of the prior year.  Electronic trading is progressing in line with our expectations and continues to make an increasing contribution to execution revenues with a growing list of clients.  As expected, Brexit has resulted in a reduction in institutional income from EU based clients.  However, this forfeited revenue is not material and has been more than offset by revenue growth from US based accounts served by our New York office. 
 
Trading book limits were increased during the half in view of the decline in market volatility and increasing demand for liquidity in small and mid cap equities.  Our trading book achieved gains of £12m representing growth of 76% relative to the prior period. 
 
EU office 
 
We are progressing our plans to establish an EU presence in Dublin during the first half of FY22, subject to regulatory approval. Whilst Brexit has had minimal impact on the performance of the business, an EU office would both restore certain EU institutional client relationships and provide us with the opportunity to expand our Capital Markets offering throughout Europe with the benefit of passporting. 
 
In recent years we have established relationships with some of the leading growth companies globally and built a network of international growth focused investors.  Our growing reputation beyond the UK is presenting opportunities for Numis to participate in international mandates on an increasingly frequent basis. We believe this represents an excellent growth opportunity for the business over the longer term and we will be investing in capability across both Investment Banking and Equities within the new Irish subsidiary. 
 
Investment portfolio
Our investment portfolio is currently valued at £16.2m and we recognised gains of £2.0m during the period, the majority of which related to a new investment made at the start of the period. We partially exited one investment during the period and expect to complete further exits during the second half as we seek liquidity events for our legacy holdings.  
Costs and people 




 


H1 2021
£m


H1 2020
£m


%
Change




Staff costs


55.2


31.3


76.0%




Share-based payments


5.8


5.2


11.2%




Non-staff costs 


15.7


17.4


(10.0)%




Total administrative costs


76.7


54.0


42.0%




Period end headcount


287


285


0.7%




Average headcount


287


281


2.1%




Compensation ratio


52.8%


58.0%


(5.2)ppts




 
 
Average headcount was broadly in line with the prior period and the FY20 year end headcount.  In an increasingly competitive market for talent we have continued to invest across the business in support of our strategic priorities. Our staff have shown great commitment in both navigating the challenges of remote working whilst originating and executing a very high volume of transactions.  In response, we have introduced a number of initiatives to support staff and recognise their efforts during these challenging circumstances.
 
We expect headcount to increase in the second half of the year as we focus on Investment Banking hires to provide additional capacity to execute the anticipated volume of deals. In addition, we expect to grow the Growth Capital Solutions team in view of the consistent revenue growth achieved over the past 3 years. 
 
Whilst fixed staff costs are marginally higher than the comparative period, staff costs overall have increased due to materially higher variable compensation reflecting the significant improvement in profit performance over the half.  Our share based payment charge was £5.8m reflecting an increase of 11%. We expect the second half charge to reduce given the particularly high number of equity awards vested during the first half. 
 
Compensation costs as a percentage of revenue decreased to 53%, lower than both the comparative period and the FY20 level reflecting the improved performance of the business. We continue to target an appropriate alignment between staff compensation, business performance and shareholder returns. Over the course of the second half of the year we may incur further investment spend related to our targeted hiring activities which may offset any further reductions in the compensation ratio.
 
Non-staff costs are marginally below the comparative period. Savings related to the business operating on a remote working basis for much of the period have been offset by a £0.7m increase in occupancy costs attributable to the commencement of our lease on the new office in February ahead of the anticipated relocation in September.  In line with previous guidance, we expect the London office move to result in a total occupancy cost increase of £4m for FY21, and from FY22 our ongoing occupancy costs will be approximately £3m higher than FY20.  In addition, we are likely to incur approximately £1m of exceptional expenses related to the relocation in the current year. 
 
 
Capital and Liquidity
The Group's net asset position as at 31 March 2021 was £175.3m representing an increase of 11.2% compared to 30 September 2020.  We continue to operate significantly in excess of our regulatory capital requirements and believe this provides the group with the flexibility to pursue strategic opportunities whilst also navigating the cyclical nature of our industry with confidence. 
Our cash position was in line with the comparative period and below the FY20 year end position. During the half we started incurring capital expenditure on the new office fit-out and relocation project, the majority of this investment spend will occur in the second half.  In addition, cash was utilised by an increase in our trading books reflecting the significantly improved market environment compared to last year when the Group's liquidity position benefited from a reduction in trading book limits due to pandemic related volatility. Our cash position is supplemented by a revolving credit facility which is currently undrawn, this facility has recently been extend on the same terms to 2023.
Dividends and share purchases
The Board has declared an interim dividend for the year of 5.5p per share in accordance with our stated policy. The dividend will be paid on 18 June 2021 to shareholders on the Register on 21 May 2021.  
During the period we spent £11.5m on share repurchases compared to £5.5m in the previous period.  This increase in repurchase spend was attributable to a higher than usual volume of share vestings in the period and associated tax offset purchases. Our share count remains 6m lower than 5 years ago, however we expect the share count to increase at the end of the second half of the year given the likely vesting of 2016 LTIP awards. Our intention remains to continue mitigating the impact of staff equity awards through buybacks over time. In addition, and in accordance with our returns policy, we will continue to review the possibility to return excess capital through buybacks and special dividends taking into consideration the capital and liquidity requirements of the Group's growth initiatives. 
Current trading and outlook
The Investment Banking pipeline continues to benefit from a high volume of IPO mandates and the near term outlook for further Growth Capital Solutions and M&A revenues is also encouraging.  We therefore expect the broad profile of Investment Banking revenues featured throughout the first half to be sustained in the second half of the year. 
Whilst our pipeline is becoming more diversified by sector as market confidence builds across a wider range of industries, execution of the IPO pipeline in particular will be dependent upon the current positive market environment persisting. 
 
 
Alex Ham & Ross Mitchinson
Co-Chief Executive Officers
7 May 2021
 
Consolidated Income Statement
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2021
 
 
 




 


 


6 months ended


6 months ended


Year ended




 


 


31 March 2021


31 March 2020


30 September 2020




 


 


      Unaudited


Unaudited


Audited




 


Notes


        £'000


£'000


        £'000




Revenue


3


115,426


63,104


154,899  




 


 


 


 


 




Other operating income/(loss)


4


1,974


(1,904)


310




Total income


 


117,400


61,200


155,209




 


 


 


 


 




Administrative expenses


5


(76,652)


(53,973)


(118,409)




Operating profit


 


40,748


7,227


36,800




 


 


 


 


 




Finance income


6


1


420


986




Finance costs


6


(1,422)


(390)


(723)




Profit before tax


 


39,327


7,257


37,063




 


 


 


 


 




Taxation  


 


(9,549)


(1,003)


(5,713)




 


 


 


 


 




 
Profit after tax


 


29,778


6,254


31,350




 


 


 


 


 




Attributable to:


 


 


 


 




Owners of the parent


 


29,778


6,254


31,350




 


 


 


 


 




Earnings per share


7


 


 


 




   Basic


 


28.6p


6.0p


29.9p




   Diluted


 


25.7p


5.5p


26.7p




 


 


 


 


 




 
 
Consolidated Statement of Comprehensive Income
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2021
 




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020 




 


      Unaudited


Unaudited


Audited




 


        £'000


£'000


        £'000




Profit for the period


29,778


6,254


31,350




 


 


 


 




Exchange differences on translation of foreign operations


(1)


27


227




Other comprehensive income for the period, net of tax


(1)


27


227




 


 


 


 




Total comprehensive income for the period, net of tax, attributable to the owners of the parent


29,777


6,281


31,577




 
 
Consolidated Balance Sheet
UNAUDITED AS AT 31 MARCH 2021
 
 
 
 




 


 


31 March 2021


31 March 2020


30 September 2020




 


 


Unaudited 


Unaudited 


Audited




 


Notes


£'000


£'000


£'000




Non-current assets


 


 


 


 




Property, plant and equipment


 


3,680


2,418


2,596 




Intangible assets


 


380


222


406




Right-of-use asset


9a


39,463


5,045


4,020




Deferred tax


9b


6,030


3,194


5,617 




 


 


49,553


10,879


12,639 




Current assets


 


                


                


 




Trade and other receivables


9c


410,415


246,151


326,156 




Trading investments


9d


51,501


25,367


38,089 




Stock borrowing collateral


9e


21,769


10,658


18,222




Current income tax receivable


 


1,060


1,004


1,332




Derivative financial instruments


 


-


-


18 




Cash and cash equivalents


9g


97,619


95,332


125,217 




 


 


582,364


378,512


509,034 




Current liabilities


 


 


 


 




Trade and other payables


9c


(393,505)


(236,176)


(340,265)




Financial liabilities


9f


(23,322)


(10,882)


(19,170)




Lease liabilities


9a


(1,129)


(1,925)


(1,962)




 


 


(417,956)


(248,983)


(361,397)




 


 


 


 


 




Net current assets


 


164,408


129,529


147,637




 


 


 


 


 




 
Non-current liabilities


 


 


 


 




Lease liabilities


9a


(38,684)


(3,736)


(2,643)




 


 


 


 


 




 


 


 


 


 




Net assets


 


175,277


136,672


157,633




 


 


 


 


 




Equity


 


 


 


 




Share capital


 


5,922


5,922


5,922 




Other reserves


 


14,833


19,755


22,421 




Retained earnings


 


154,522


110,995


129,290 




 


 


 


 


 




Total equity


 


175,277


136,672


157,633




 
 
Consolidated Statement of Changes in Equity
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2021
 




 


 


Share capital
£'000


Other reserves £'000


Retained earnings £'000


Total 
£'000


 




 


 


 


 


 


 


 




Balance at 1 October 2019


 


          5,922 


20,639


      111,593 


138,154




 
Profit for the period


 


               


 


6,254


6,254




Other comprehensive income 


 


               


27


-


27




Total comprehensive income for the period


 


-


27


6,254


6,281




 
Dividends paid


 


 


 


(6,787)


(6,787)




Movement in respect of employee share plans


 


 


(912)


(2,853)


(3,765)




Deferred tax related to share-based payments


 


 


 


(647)


(647)




Net movement in Treasury shares


 


 


 


3,436


3,436




Transactions with shareholders


 


-


(912)


(6,852)


(7,763)




 


 


 


 


 


 




Balance at 31 March 2020


 


5,922


19,755


110,995


136,672




 
 


 


 


 


 


 




Balance at 1 October 2019


 


5,922


20,639


111,593


138,154




 
Profit for the year


 


               


 


31,350


31,350




Other comprehensive income 


 


               


227


-


227




Total comprehensive income for the year


 


-


227


31,350


31,577




 


 


 


 


 


 




Dividends paid


 


 


 


(12,582) 


(12,582)




Movement in respect of employee share plans


 


 


1,555


(1,711)


(156)




Deferred tax related to share-based payments


 


 


 


677


677




Net movement in Treasury shares


 


 


 


(37)


(37)




Transactions with shareholders


 


-


1,555


(13,653)


(12,098)




 


 


 


 


 


 




Balance at 30 September 2020


 


5,922


22,421


129,290


157,633




 


 


 


 


 


 




Balance at 1 October 2020


 


          5,922 


20,421


129,290 


157,633


 




 
Profit for the period


 


               


 


29,778


29,778


 




Other comprehensive income 


 


               


(1)


-


(1)


 




Total comprehensive income for the period


 


-


(1)


29,778


29,777


 




 


 


 


 


 


 


 




Dividends paid


 


 


 


(6,825)


(6,825)


 




Movement in respect of employee share plans


 


 


(7,587)


(5,802)


(13,389)


 




Deferred tax related to share-based payments


 


 


 


905


905


 




Net movement in Treasury shares


 


 


 


7,176


7,176


 




Transactions with shareholders


 


-


(7,587)


(4,546)


(12,133)


 




 


 


 


 


 


 


 




Balance at 31 March 2021


 


5,922


14,833


154,522


175,277


 



 
 
 
 
 
 
 
 
 
 
 
 



 
Consolidated Statement of Cash Flows 
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2021
 
 
 
 




 


 


6 months ended


6 months ended


Year ended




 


 


31 March 2021


31 March 2020


30 September 2020




 


 


Unaudited


Unaudited 


Audited




 


Notes


£'000


£'000


£'000




Cash flows from operating activities


10


3,988


28,175


76,051




Interest paid


 


(1,104)


(270)


(497)




Taxation paid


 


(8,785)


(3,464)


(9,601)




Net cash (used in)/from operating activities


 


(5,901)


24,441


69,953




 


 


 


 


 




Investing activities


 


 


 


 




Purchase of property, plant and equipment


 


(1,577)


(212)


(1,029)




Purchase of intangible assets


 


(49)


(189)


(431)




Interest received


 


1


420


986 




Net cash (used in)/from investing activities


 


(1,625)


19


(474) 




 


 


 


 


 




Financing activities


 


 


 


 




Purchase of own shares - Employee Benefit Trust


 


(9,908)


(3,548)


(5,426)




Purchase of own shares - Treasury


 


(1,555)


(1,953)


(4,344)




Cash paid in respect of lease arrangements - principal 


 


(1,493)


(922)


(1,873)




Cash paid in respect of lease arrangements - discount


 


(318)


(120)


(226)




Dividends paid


 


(6,825)


(6,787)


(12,582)




Net cash used in financing activities


 


(20,099)


(13,330)


(24,451)




 


 


 


 


 




Net movement in cash and cash equivalents


 


(27,625)


11,130


41,028




 


 


 


 


 




Opening cash and cash equivalents 


 


125,217


84,202


84,202 




Net movement in cash and cash equivalents


 


(27,625)


11,130


41,028




Exchange movements


 


27


-


(13)




Closing cash and cash equivalents


 


97,619


95,332


 
125,217 




 
 
 
 
Notes to the Financial Statements
 
1.      Basis of preparation
 
Numis Corporation Plc is a UK AIM traded company incorporated and domiciled in the United Kingdom. The address of its registered office is 10 Paternoster Square, London, EC4M 7LT.  The Company is incorporated in the United Kingdom under the Companies Act 2006 (company registration No. 2375296). 
 
The consolidated financial information contained within these financial statements is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. These financial statements have been prepared in accordance with AIM Rule 18. The statutory accounts for the year ended 30 September 2020, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and in accordance with International Financial Reporting Interpretations Committee (IFRIC) interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies.  The report of the independent auditor on those statutory accounts contained no qualification or statement under Section 498(2) or (3) of the Companies Act 2006. 
 
The preparation of these interim financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The judgements and estimates applied by the Group in these interim financial statements have been applied on a consistent basis with the statutory accounts for the year ended 30 September 2020.  Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.
 
These interim financial statements are prepared on the historical cost basis, except for the revaluation of certain financial instruments.
 
These interim financial statements are prepared on a going concern basis as the directors have satisfied themselves that, at the time of approving these interim financial statements, the Group has adequate resources to continue in operational existence for at least the next twelve months.
 
During the period, there were no new standards or amendments to IFRS became effective and were adopted by the Company and the Group.
    
 
2.     Segmental reporting
 
Geographical information
The Group is managed as an integrated investment banking and equities business and although there are different revenue types (which are separately disclosed in note 3) the nature of the Group's activities is considered to be subject to the same and/or similar economic characteristics.  Consequently, the Group is managed as a single business unit.
 
The Group earns its revenue in the following geographical locations:
 




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




United Kingdom


110,271


60,358


144,333 




United States of America


5,155


2,746


10,566 




 


115,426


63,104


154,899 




 
The following is an analysis of the carrying amount of non-current assets (excluding deferred tax assets) by the geographical area in which the assets are located:
 




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




United Kingdom


40,887


4,225


3,994 




United States of America 


2,636


3,460


3,028 




 


43,523


7,685


7,022 




 
Other information
In addition, the analysis below sets out the income performance and net asset split between our investment banking and equities business and the equity holdings which constitute our investment portfolio.  
 




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Equities income


                33,386


                26,233


53,195




Corporate retainers


6,293


6,811


13,536




Total corporate transactions revenues


75,747


30,060


88,168




Revenue (see note 3)


115,426


63,104


154,899




 


 


 


 




Investment activity net gains/(losses)


1,974


(1,904)


310




Contribution from investment portfolio


1,974


(1,904)


310




Total income


117,400


61,200


155,209




 


 


 


 




 
 




Net assets


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Investment banking and equities activities


61,434


28,380


17,685




Investing activities 


16,224


12,960


14,731




Cash and cash equivalents


97,619


95,332


125,217




 
Total net assets


175,277


136,672


157,633




 


 


 


 




 
3.     Revenue




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Net trading gains


11,507


6,548


16,003




Institutional income


21,879


19,685


37,192 




Equities income


33,386


26,233


53,195




 
Corporate retainers


6,293


6,811


13,536 




Advisory 


12,428


7,225


11,146 




Capital markets 


63,319


22,835


77,022 




Investment banking income


82,040


36,871


101,704




Total


115,426


63,104


154,899 




 
 
4.      Other operating income/(loss)
 
Other operating income/(loss) represents net gains or losses made on investments which are held outside of the market making portfolio. The gains or losses reflect price movements on quoted holdings, fair value adjustments on unquoted holdings and related dividend income. In the period, our portfolio of unquoted investments benefitted from positive valuation movements, specifically in relation to the release of previous downward valuation adjustments in relation to the impact from the COVID-19 pandemic.
 
 
5.     Administrative expenses




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Wages and salaries


45,719


26,285


63,086




Social security costs


8,639


4,091


10,771




Compensation for loss of office


12


172


440




Pension costs


808


801


1,719




Share-based payments


5,824


5,237


9,961




Staff costs


61,002


36,586


85,977




 
 




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




Depreciation of property, plant and equipment


492


584


1,223




Depreciation of right-of-use assets


1,229


862


1,793




Amortisation of intangible assets


75


47


105




Other non-staff costs


13,854


15,894


29,311




Non-staff costs 


15,650


17,387


32,432




 


76,652


53,973


118,409




 
The average number of employees during the period has increased to 287 (31 March 2020: 281).  Staff costs including share award related charges have increased by 66.7% compared to the prior period due to the improved operating performance resulting in higher variable compensation.  Non-staff costs have decreased by 10.0% compared to the prior period.
 
 
6.     Finance income and Finance costs
 
Finance income for the period:




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Interest income


1


226


261




Net foreign exchange gains


-


194


650




Other income


-


-


75




 


1


420


986




 


 


 


 




Finance costs for the period:




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Interest expense


211


270


497




Unwind of lease liability discount


318


120


226




Net foreign exchange losses


893


-


-




 


1,422


390


723




 
Finance costs have increased in the current financial year due to the unwinding of the lease liability discount for the new London office lease and foreign exchange losses in relation to US operations, due to the strengthening of GBP over the period.
 
 
7.     Earnings per share
 
Basic earnings per share is calculated on profits after tax of £29,778,000 (31 March 2020: £6,254,000) and 104,242,148 (31 March 2020: 104,162,166) ordinary shares being the weighted average number of ordinary shares in issue during the period. Diluted earnings per share takes account of contingently issuable shares arising from share scheme award arrangements where their impact would be dilutive.  In accordance with IAS 33, potential ordinary shares are only considered dilutive when their conversion would decrease the profit per share or increase the loss per share from continuing operations attributable to the equity holders.  Therefore, shares that may be considered dilutive while positive earnings are being reported may not be dilutive while losses are incurred.
 
The calculations exclude shares held by the Employee Benefit Trust on behalf of the Group and shares held in Treasury.




 
 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


Number


Number


Number




 


Thousands


Thousands


Thousands




Weighted average number of ordinary shares in issue during the period - basic


104,242


104,162


104,987




Dilutive effect of share awards


11,602


8,946


12,313




Diluted number of ordinary shares


115,844


113,108


117,300




 
 
8.     Dividends




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Final dividend year ended 30 September 2019 (6.50p)


 


6,788


6,788




Interim dividend year ended 30 September 2020 (5.50p)


 


 


5,794




Final dividend year ended 30 September 2020 (6.50p)


6,825


 


 




Distribution to equity holders of Numis Corporation Plc 


6,825


6,788


12,582




 
The Board has approved the payment of an interim dividend of 5.50p per share (2020: interim 5.50p per share). This dividend will be payable on 18 June 2021 to shareholders on the register of members at the close of business on 21 May 2021. These financial statements do not reflect this dividend payable.
 
Distributable reserves
Following an internal review of the Company's distributable reserves on a solo entity basis over the period from FY05 to date, a number of dividends and buybacks have been identified where the determination of distributable reserves was inconsistent with guidance on the application of the Companies Act 2006. The dividends concerned relate to numerous periods between FY06 and FY20, and the buybacks concerned relate to periods from FY13 to December 2020. 
While sufficient distributable reserves existed in the consolidated Group at the times of all historic payments, the level of distributable reserves in the Company itself has been determined to have been insufficient.  At the next AGM (February 2022), resolutions will be proposed to address the historic positions.  The Group's current and historic capital positions are unaffected by the outcome of this review and Group's ability to make distributions in accordance with its dividend policy is unaffected.
 
 
9.     Balance sheet items
 
(a)       Right-of-use asset and lease liabilities
The right-of-use asset and lease liabilities (current and non-current) represent the two property leases that the Group currently uses for its offices in London and New York plus a new 15-year lease for a new office in London.
 
(b)      Deferred tax
As at 31 March 2021 deferred tax assets totalling £6,030,000 (30 September 2020: £5,617,000) have been recognised reflecting management's confidence that there will be sufficient levels of future taxable profits against which these deferred tax asset can be utilised. The deferred tax asset principally comprises amounts in respect of unvested share-based payments.  
 
(c)       Trade and other receivables and Trade and other payables
Trade and other receivables and trade and other payables principally comprise amounts due from and due to clients, brokers and other counterparties. Such amounts represent unsettled sold and unsettled purchased securities transactions and are stated gross. The magnitude of such balances varies with the level of business being transacted around the reporting date. Included within Trade and other receivables are cash collateral balances held with securities clearing houses of £23,067,000 (30 September 2020: £12,687,000).
 
(d)      Trading investments
Included within trading investments is £16,224,000 (30 September 2020: £14,701,000) of investments held outside of the market making portfolio. The net increase during the period has been due to favourable revaluation movements largely attributable to the improving situation in relation to COVID-19 and the positive progress of a new investment in the period.
 
(e)      Stock borrowing collateral
The Group enters stock borrowing arrangements with certain institutions which are entered into on a collateralised basis with cash advanced as collateral. Under such arrangements a security is purchased with a commitment to return it at a future date at an agreed price. The securities purchased are not recognised on the balance sheet.  Where cash has been used to affect the purchase, an asset is recorded on the balance sheet as stock borrowing collateral at the amount of cash collateral advanced or received.
 
(f)       Financial liabilities
Financial liabilities comprise short positions in quoted securities arising through the normal course of business in facilitating client order flow and form part of the market making portfolio. 
 
(g)       Cash and cash equivalents
Cash balances are in line with than those reported as at 31 March 2020.  Dividend distributions have been maintained at a similar level to the prior period (£6.8m cash outflow). The repurchase of shares into Treasury and the Employee Benefit Trust have continued, but at a higher level than the prior period (£11.5m cash outflow).  
 
(h)      Investment commitment
During 2018 the Company signed an investment subscription agreement in a U.S. private fund with a total subscription value of $1.0m. The full amount of the subscription had not been called upon at the balance sheet date. The fund calls upon capital as it is required and at the balance sheet date $960,000 had been called up and paid. This is classified within Trading Investments. The remaining $40,000 has not yet been called and is therefore a commitment until it is paid over to the fund. The subscription agreement allows that the investment can be called any time up till the 5th anniversary of the agreement, which is June 2023.
 
 
 
10.     Reconciliation of profit before tax to cash from operating activities
 




 


6 months ended


6 months ended


Year ended




 


31 March 2021


31 March 2020


30 September 2020




 


Unaudited


Unaudited 


Audited




 


£'000


£'000


£'000




Profit before tax


39,327


7,257


37,063




Net finance expense/(income)


1,421


(30)


(263) 




Depreciation charge on property, plant and equipment


492


584


1,223




Depreciation charge on right-of-use asset


1,229


862


1,793




Amortisation charge on intangible assets


75


47


105 




Share scheme charges


5,252


5,200


9,806




(Increase)/decrease in current asset trading investments


(13,412)


13,096


374 




(Increase) in trade and other receivables


(84,259)


(58,893)


(138,898)




(Increase)/decrease in stock borrowing collateral


(3,547)


3,982


(3,582) 




Increase in trade and other payables 


57,392


54,292


166,669 




Other balance sheet movements in respect of leases


-


676


676




Decrease in derivatives


18


1,103


1,085




Cash from operating activities


3,988


28,175


76,051




 
The increase in cash from operating activities during the six months ended 31 March 2021 reflects an increase in profitability for the period, partially offset by an increase in current asset trading investments and outflows in respect of seasonal expense items which fall within the first half of our financial year.

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