REG - Numis Corporation - Half-year Report
06/05/2022 07:00
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RNS Number : 5329K Numis Corporation PLC 06 May 2022
Numis Corporation Plc
Half Year Results
for the six months ended 31 March 2022
London, 6 May 2022 Numis Corporation Plc ("Numis", "Group" or "Company") today
announces unaudited interim results for the period ended 31 March 2022.
Highlights
· Advisory revenues up 39%, reflecting significant progress in our
strategic objective to diversify our Investment Banking business
· Growth Capital Solutions, our private markets business, delivered a
resilient performance in line with the prior year
· Capital markets revenues declined 61% due to the challenging backdrop
for equity issuance
· In the Equities business, institutional income remained resilient but
overall revenue decreased relative to a strong comparative period as a
function of lower trading gains
· Interim dividend increased to 6.0p in accordance with sustainable
upward re-based dividend pay-out announced last year
· Strong capital and liquidity position enabled the share buyback
programme to be re-initiated in the first half; market purchases expected to
increase in the second half
· Good start to the second half with a number of ongoing announced
M&A mandates, as well as a strong pipeline of further deals
· International expansion progressing with Dublin office expected to
commence trading during the second half, facilitating access to EU issuers and
expanding access to EU-based investors
Financial highlights H1 2022 H1 2021 Change
Revenue £74.2m £115.4m (35.8)%
Underlying operating profit £14.0m £38.8m (63.9)%
Profit before tax £13.4m £39.3m (65.9)%
EPS 14.6p 25.7p (43.1)%
Cash £111.5m £97.6m 14.2%
Net assets £190.8m £175.3m 8.9%
Operating highlights
Corporate clients 183 185 (1)%
Average market cap of corporate clients £1,225m £1,341m (9)%
Revenue per head (annualised) £457k £804k (43)%
Operating margin 18.9% 33.6% -14.7ppts
Spend on share repurchases £6.5m £11.5m (43)%
Notes:
1) Revenue, Underlying operating profit, Operating margin and
Revenue per head all exclude investment income
2) Diluted EPS
3) H1 FY22 Spend on share repurchases comprises £3.2m spend on
market purchases (2021: £1.6m) and £3.4m spend on EBT tax offset purchases
(2021: £9.9m)
On the strategic progress of the business, Alex Ham and Ross Mitchinson,
Co-Chief Executive Officers, said:
"Five years ago we identified capturing M&A fees and building a private
markets business as two strategic priorities to lead our ambition of building
a more diversified investment banking group with reduced earnings volatility.
We are pleased that progress against this objective has been further
demonstrated in our first half performance this year - a period that has been
characterised by a slowdown in equity capital markets activity globally. In
the first six months, our Growth Capital Solutions and M&A products in
aggregate achieved a record performance and contributed more than half of our
Investment Banking revenues.
Over the coming months we look forward to expanding our European business from
our new office in Dublin, subject to regulatory approvals. This will
facilitate further geographical diversification of our revenues by leveraging
both our UK capital markets track record and leading Equities platform.
Alongside internationalisation, we also plan to recruit and develop talent
across our business, maintaining a collaborative culture that has always been
critical to our success."
On current trading they added:
"Capital markets activity has recovered to some extent following an
exceptionally quiet three month period at the start of the year and we have
completed both private and public markets capital raisings in recent weeks.
The Equities business has continued to perform in line with the first half
run-rate. However, investor confidence remains relatively fragile given
continued inflation concerns and geo-political uncertainty and therefore the
capital markets outlook remains difficult to predict.
Advisory activity remains strong, and our M&A pipeline is continuing to
grow. We expect to complete a number of M&A transactions for corporate
clients in the coming weeks and maintain the positive momentum in advisory
revenues through the second half."
Contacts:
Numis Corporation:
Noreen Biddle Shah, Head of Corporate 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
Ciara
Donnelly
020 7728 2889
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
and their investors. Numis is listed on AIM, and has offices in London, New
York and Dublin.
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018.
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
Following a sustained period of supportive markets across the prior 18 months,
the six month period to 31 March 2022 featured growing investor caution
culminating in an effective closure of global capital markets during the
initial stages of the war in Ukraine. A detailed review of all clients and
business operations completed at the start of the conflict confirmed we have
no direct exposure to Russia or the related sanctions. Overall, revenues
decreased 35.8% to £74.2m (2021: £115.4m) and Underlying operating profit
decreased to £14.0m (2021: £38.8m) reflecting the operational gearing in the
business. Profit before tax was £13.4m (2021: £39.3m) and included £0.4m
of gains recognised on investments held outside of our market making business
(2021: £2.0m gain). Our net assets increased over the period to £190.8m,
and similarly our liquidity position was enhanced; cash balances were £111.5m
(2021: £97.6m).
Market conditions
Inflation and interest rate concerns increasingly dominated investor sentiment
during the first half, resulting in significant market movements and periods
of elevated volatility. In particular, growth stocks suffered a broad
de-rating as investors rotated their portfolios in response to emerging macro
themes. The FTSE 250, which is most closely aligned to our business
activities, declined 8% over the course of our first half, underperforming the
FTSE 100 which increased 6%.
Corporate activity levels were adversely impacted by the cautious investor
sentiment. This was compounded by the war in Ukraine which resulted in a
pause in financing activity whilst markets assessed the impact of sanctions
and the rapidly evolving geo-political landscape. As a result, IPO volumes and
UK ECM activity were particularly weak during the second quarter.
Capital raising across global private markets was impacted by a more
challenging and unpredictable pricing environment. However, whilst deal
structures invariably required reassessment during this period, the private
markets continued to function, and investors continued to deploy capital.
Appetite for M&A proved to be more resilient. In particular, bid activity
amongst UK mid-market companies has been strong and private equity has been
particularly active during the period.
Investment Banking
H1 2022 H1 2021 %
£m £m Change
Capital Markets 24.7 63.3 (61.0)%
Advisory 17.2 12.4 38.8%
Corporate retainers 6.1 6.3 (2.9)%
Investment Banking revenue 48.0 82.0 (41.4)%
Investment Banking revenue for the first half was down 41.4% relative to the
prior year which represented a record six month performance. The significant
reduction in UK ECM volumes across the industry impacted our Capital markets
revenue. In particular, IPO revenues, which underpinned revenues in the
comparative period, were down 81%.
Whilst deal volumes in Q1 were in line with the strong prior year performance,
there was a significant decline in activity in Q2 as the market backdrop
became increasingly challenging. Relative to the prior year, there was a
notable absence of large ECM transactions which resulted in average deal fees
falling in the first half. Given the strength of the corporate client base and
our Capital markets track record, we expect average deal fees to recover in
line with any recovery in equity financing activity.
Our strategic priority for the Investment Banking business over the past five
years has been diversification of deal revenues. We have consistently
strengthened our M&A credentials through enhancing our sector based
advisory capability and added greater capacity to our M&A execution
capability. This has enabled the business to capitalise on the supportive
M&A environment and deliver a strong Advisory performance in the first
half, 38.8% ahead of the prior period. In addition, our Debt advisory product
delivered its best six month revenue performance since its launch three years
ago.
We continue to focus our M&A origination efforts on the retained corporate
client base where we aim to deliver differentiated strategic advice alongside
our comprehensive corporate broking service. During the period, all our
M&A fees were earned from our corporate broking client base demonstrating
the intrinsic value of these long standing and trusted relationships. We
also continue to make positive progress in growing our share of M&A fees
on transactions. During the first half we increased our average M&A fee by
approximately 30% which partially offset the reduction in average fee size
within our Capital markets business.
Growth Capital Solutions, our private markets business, represents another
pillar of our Investment Banking diversification strategy. Our agile approach
and ability to respond to a rapidly evolving valuation environment enabled us
to maintain momentum in this business line and deliver revenues broadly in
line with the prior period. This continues to represent an attractive growth
opportunity. Our global reputation and track record have been further
enhanced during this period of market uncertainty. All the Growth Capital
Solutions deals executed in the period were for companies based outside the
UK, similarly the majority of demand for these deals was generated from
investors based outside the UK.
Our broader geographic expansion plans have progressed, and we expect our
Dublin office to receive regulatory approval in the second half of the year.
This will enable the business to advance its capital markets ambitions in
Europe. The initial focus will be on securing IPO mandates where we can offer
differentiated distribution and advice. Whilst European opportunities were
restricted in the first half, we demonstrated our ability to leverage our
expertise and distribution platform for companies listed overseas by acting on
our first US IPO, the NYSE listing of Nubank.
Our UK corporate broking franchise remains at the core of our business model
and developing our corporate client list remains a strategic focus. During the
year we won a number of high quality FTSE350 clients although these wins have
been offset numerically by client losses attributable to the buoyant M&A
market. The average market capitalisation of our corporate client base was
£1.2bn, which was down 9% compared to FY21, in line with the FTSE250 index
performance over the same period.
Equities
H1 2022 H1 2021 %
£m £m change
Institutional income 19.6 21.9 (10.3)%
Trading 6.5 11.5 (43.7)%
Equities revenue 26.1 33.4 (21.8)%
Equities delivered revenue of £26.1m for the first half, representing a
decline of 21.8% relative to the record performance of the prior period.
Institutional income was resilient, although down 10.3% compared to an
exceptionally active period for global equities. Despite the challenging
market backdrop, first half institutional income was ahead of H2 FY21 and
represented one of our best six month performances since the introduction of
MiFID II. This demonstrates the value of our strategy to focus on market
share gains in UK equities through providing an exceptional level of service
to institutional clients whilst also providing the best possible distribution
platform for our Capital markets business. Recent market volatility and the
increasing focus on macro issues has prompted high levels of engagement from
institutions reflecting the quality and experience of our research and sales
teams.
Our Electronic Trading product which was launched two years ago, continues to
gather new clients and reported a record six month performance for the first
half.
Whilst our Equities business has delivered good progress over recent years,
the restrictions attributable to Brexit have limited our ability to engage
with EU based institutions. We expect our Dublin office will enable those EU
relationships to be re-established in the near term providing these investors
with a high quality and dedicated service from the experienced team recruited
in Dublin.
Trading gains were down 43.7% on the comparative period. The trading book
generally delivered consistent profits across the six month period, save for
the initial weeks of the Ukraine war when market volatility impacted
performance. Subsequently the run-rate trading performance has returned to
levels in line with prior years.
Investment portfolio
We continued to rotate the investment portfolio in the first half, exiting our
holding in Oxford Nanopore Technologies plc subsequent to its IPO and
completing a further disposal in the period. The proceeds were partially
invested in two new companies, both of which are aligned with our private
markets business. Notwithstanding the encouraging operating performance of
many of our recent investments, market valuations and in particular the
de-rating of global listed technology stocks resulted in downward valuation
movements for a number of holdings in the second quarter. Overall, the
portfolio delivered £0.4m of gains and is now valued at £17.6m representing
approximately 9% of group net assets.
Costs and people
H1 2022 H1 2021 %
£m £m Change
Staff costs 36.0 55.2 (34.7)%
Share-based payments 3.0 5.8 (48.1)%
Non-staff costs 21.1 15.7 34.9%
Total administrative costs 60.1 76.7 (21.5)%
Period end headcount 325 287 13.2%
Average headcount 324 287 12.9%
Compensation ratio 52.6% 52.8% (0.2)ppts
Average headcount increased during the period due to further hiring in
Investment Banking where we continue to focus on junior recruitment and
growing our capabilities in support of the diversification strategy. The
completion of the initial phase of hiring for our Dublin office also
contributed to the increase in the period.
Staff costs have declined 34.7% due to lower variable compensation reflecting
the lower operating performance in the period. Fixed staff costs have
increased marginally more than previous years in response to a period of
elevated competition for talent in certain areas of the business. However,
our staff attrition levels remain very low and not materially different to
historic levels which we believe reflects the strong collaborative culture at
Numis and the strategic progress the firm continues to achieve.
Our share based payment charge decreased 48.1% as a result of the vesting of a
number of one-off equity awards at the end of the prior year. These vestings
resulted in a one-off tax benefit in the first half. The compensation ratio
remained in line with the prior period and well within our target range. The
lower revenue performance of the business was offset by the lower share scheme
charge. New regulations governing the remuneration of certain senior staff
have been implemented by the FCA but will not impact Numis until FY23 when we
expect to be required to defer a greater proportion of variable compensation
and use more equity to reward staff.
Non-staff costs increased due to higher occupancy costs attributable to our
move to larger offices which was completed at the end of FY21. In addition,
we have incurred costs related to our new Dublin office and the ongoing
regulatory application process. Other non-staff cost increases are generally
attributable to the higher average headcount and the normalisation of costs
which were previously supressed as a result of staff predominantly working
remotely.
Capital and liquidity
Notwithstanding the lower profitability of the Group during this period of
market uncertainty, we continue to operate significantly in excess of our
regulatory capital and liquidity requirements. The Group's net assets
increased 8.9% compared to FY21 to £190.8m. Our balance sheet strength
enables the business to pursue its strategic priorities across market cycles
and continue to invest in the platform during periods of lower deal activity.
As a result we believe the business is able to emerge from each market
downturn in a stronger position to benefit from future market recoveries.
A new regulatory capital regime for investment firms was implemented on 1
January 2022. Our Pillar 1 capital requirement is lower under the new
regulation however we await the FCA's determination of our overall regulatory
capital requirements under the new regime. During this transition phase there
is no change to our regulatory capital requirement.
Our cash position was ahead of the comparative period and below the FY21 year
end position. The profitable trading performance was offset by seasonal cash
outflows largely related to the payment of FY21 variable compensation.
Dividends and share purchases
At the end of FY21 the Board reassessed the return capacity of the business
and rebased the full year dividend to 13.5p, representing an increase of
12.5%. The rebased dividend provides sufficient flexibility to continue
investing in the growth opportunities outlined above whilst also maintaining
the balance sheet strength to continue supporting consistent shareholder
returns in the future.
In accordance with the rebased dividend the Board has declared an interim
dividend of 6.0p per share. The dividend will be paid on 21 June 2022 to
shareholders on the register on 20 May 2022.
In addition market purchases of shares have been executed across the first six
months of the year totalling £3.2m. This is supplemented by tax offset
purchases by the EBT upon the vesting of share awards. The board has
approved an increase to the market purchase programme for the second half.
Whilst the closing first half share count is in line with FY21, our intention
remains to continue mitigating the impact of staff equity awards through
buybacks and we expect the share count to decline over the course of the
second half.
Current trading and outlook
April revenue was marginally ahead of the first half run-rate. Capital markets
activity has recovered to some extent following an exceptionally quiet three
month period and we have completed both private and public markets capital
raisings in recent weeks. However, investor confidence remains relatively
fragile given continued inflation concerns and geo-political uncertainty,
therefore, the Capital markets outlook remains difficult to predict.
Advisory activity continues to be strong, and our M&A pipeline is
continuing to grow. We expect to maintain the positive momentum in Advisory
revenues through the second half supported by a number of M&A transactions
for corporate clients which have been announced and will complete in the
coming weeks.
Alex Ham & Ross Mitchinson
Co-Chief Executive Officers
6 May 2022
Consolidated Income Statement
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2022
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Revenue 3 74,153 115,426 215,582
Other operating income 4 442 1,974 8,715
Total income 74,595 117,400 224,297
Administrative expenses 5 (60,146) (76,652) (147,859)
Operating profit 14,449 40,748 76,438
Finance income 6 8 1 1
Finance costs 6 (1,032) (1,422) (2,289)
Profit before tax 13,425 39,327 74,150
Taxation 7 3,357 (9,549) (16,303)
16,782 29,778 57,847
Profit after tax
Attributable to:
Owners of the parent 16,782 29,778 57,847
Earnings per share 8
Basic 15.1p 28.6p 54.2p
Diluted 14.6p 25.7p 49.1p
Consolidated Statement of Comprehensive Income
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2022
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit for the period 16,782 29,778 57,847
Exchange differences on translation of foreign operations 85 (1) 10
Other comprehensive income for the period, net of tax 85 (1) 10
Total comprehensive income for the period, net of tax, attributable to the 16,867 29,777 57,857
owners of the parent
Consolidated Balance Sheet
UNAUDITED AS AT 31 MARCH 2022
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Non-current assets
Property, plant and equipment 10,086 3,680 10,044
Intangible assets 442 380 558
Right-of-use asset 10a 36,515 39,463 38,033
Deferred tax 10b 2,987 6,030 4,006
50,030 49,553 52,641
Current assets
Trade and other receivables 10c 280,226 410,415 467,799
Trading investments 10d 55,512 51,501 58,972
Stock borrowing collateral 10e 26,378 21,769 18,623
Current income tax receivable 10,185 1,060 3,171
Derivative financial instruments 216 - 629
Cash and cash equivalents 10g 111,513 97,619 134,125
484,031 582,364 683,319
Current liabilities
Trade and other payables 10c (267,616) (393,505) (481,946)
Financial liabilities 10f (35,031) (23,322) (27,217)
Lease liabilities 10a (504) (1,129) (491)
(303,151) (417,956) (509,654)
Net current assets 180,880 164,408 173,665
Non-current liabilities
Lease liabilities 10a (40,091) (38,684) (39,580)
Net assets 190,819 175,277 186,726
Equity
Share capital 5,718 5,922 6,252
Capital redemption reserve 534 0 0
Other reserves 6,683 14,833 9,037
Retained earnings 177,884 154,522 171,437
Total equity 190,819 175,277 186,726
Consolidated Statement of Changes in Equity
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2022
Share capital Capital redemption reserve £'000 Other reserves £'000 Retained earnings £'000 Total
£'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
Dividends paid (8,943) (8,943)
Movement in respect of employee share plans (2,439) 2,353 (86)
Deferred tax related to share-based payments (562) (562)
Net movement in Treasury shares (534) 534 (3,183) (3,183)
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
Share capital Capital redemption reserve £'000 Other reserves £'000 Retained earnings £'000 Total
£'000 £'000
Balance at 1 October 2020 5,922 - 22,421 129,290 157,633
Comprehensive income for the period - - (1) 29,778 29,777
New shares issued (6,825) (6,825)
Dividends paid
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
Share capital Capital redemption reserve £'000 Other reserves £'000 Retained earnings £'000 Total
£'000 £'000
Balance at 1 October 2020 5,922 - 22,421 129,290 157,633
Comprehensive income for the year - - 10 57,847 57,857
New shares issued 330 330
Dividends paid (12,726) (12,726)
Movement in respect of employee share plans (13,394) (9.082) (22,476)
Deferred tax related to share-based payments (1,068) (1,068)
Net movement in Treasury shares 7,176 7,176
Transactions with shareholders 330 - (13,394) (15,700) (28,764)
Balance at 30 September 2021 6,252 - 9,037 171,437 186,726
Consolidated Statement of Cash Flows
UNAUDITED FOR THE 6 MONTHS ENDED 31 MARCH 2022
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Cash flows from operating activities 11 (2,794) 3,988 77,115
Interest paid (237) (1,104) (1,187)
Taxation paid (3,200) (8,785) (17,599)
Cash paid in respect of lease arrangements - discount (50) (318) (1,102)
Net cash (used in)/from operating activities (6,282) (6,219) 57,227
Investing activities
Purchase of property, plant and equipment (910) (1,577) (8,881)
Purchase of intangible assets (13) (49) (310)
Interest received 8 1 1
Net cash (used in) investing activities (915) (1,625) (9,190)
Financing activities
Purchase of own shares - Employee Benefit Trust (3,359) (9,908) (1,555)
Purchase of own shares - Treasury (3,183) (1,555) (22,663)
Cash paid in respect of lease arrangements - principal (263) (1,493) (1,811)
Dividends paid (8,943) (6,825) (12,726)
Net cash used in financing activities (15,748) (19,781) (38,755)
Net movement in cash and cash equivalents (22,944) (27,625) 9,282
Opening cash and cash equivalents 134,125 125,217 125,217
Net movement in cash and cash equivalents (22,944) (27,625) 9,282
Exchange movements 332 27 (374)
Closing cash and cash equivalents 111,513 97,619
134,125
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 45 Gresham Street,
London, EC2V 7BF. 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 2021, 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 2021. 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, no new standards or amendments to IFRS became effective.
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 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
United Kingdom 69,892 110,271 207,200
United States of America 4,261 5,155 8,382
74,153 115,426 215,582
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 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
United Kingdom 44,682 40,887 46,109
United States of America 1,999 2,636 2,526
Republic of Ireland 361 - -
47,043 43,523 48,635
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 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Equities income 26,111 33,386 60,711
Corporate retainers 6,111 6,293 12,471
Total corporate transactions revenues 41,931 75,747 142,400
Revenue (see note 3) 74,153 115,426 215,582
Investment activity net gains/(losses) 442 1,974 8,715
Contribution from investment portfolio 442 1,974 8,715
Total income 74,595 117,400 224,297
Net assets 6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Investment banking and equities activities 61,683 61,434 30,818
Investing activities 17.623 16,224 21,783
Cash and cash equivalents 111,513 97,619 134,125
190,819 175,277 186,726
Total net assets
3. Revenue
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Net trading gains 6,478 11,507 19,754
Institutional income 19,633 21,879 40,957
Equities income 26,111 33,386 60,711
6,111 6,293 12,471
Corporate retainers
Advisory 17,246 12,428 30,884
Capital markets 24,685 63,319 111,516
Investment banking income 48,042 82,040 154,871
Total 74,153 115,426 215,582
4. Other operating income
Other operating income 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 and fair value adjustments on
unquoted holdings. Our portfolio of unquoted investments was impacted by
adverse valuation movements in the second quarter which largely offset the
gains achieved in the first quarter.
5. Administrative expenses
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Wages and salaries 29,901 45,719 81,968
Social security costs 4,668 8,639 14,686
Pension costs 986 808 1,792
Share-based payments 3,025 5,824 9,634
Other staff costs 456 12 534
Staff costs 39,036 61,002 108,614
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
Depreciation of property, plant and equipment 873 492 1,154
Depreciation of right-of-use assets 1,554 1,229 3,262
Amortisation of intangible assets 129 75 158
Other non-staff costs 18,554 13,854 34,671
Non-staff costs 21,110 15,650 39,245
60,146 76,652 147,859
The average number of employees during the period has increased to 324 (31
March 2021: 287). Staff costs including share award related charges have
decreased by 36.0% compared to the prior period due to the reduced operating
performance resulting in lower variable compensation. Non-staff costs have
increased by 34.9% compared to the prior period largely as a result of
increased occupancy costs attributable to the office move.
6. Finance income and Finance costs
Finance income for the period:
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Interest income 8 1 1
Net foreign exchange gains - - -
Other income - - -
8 1 1
Finance costs for the period:
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Interest expense 174 211 439
Unwind of lease liability discount 791 318 1,102
Net foreign exchange losses 67 893 721
Other finance costs - - 27
1,032 1,422 2,289
7. Taxation
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Current Tax 3,611 5,251 10,865
Corporation tax at 19.0% (2021: 19.0%)
Corporation tax surcharge at 8.0% (2021: 8.0%) - 1,212 2,544
Adjustments in respect of prior years (7,551) 2,291 2,351
Total current tax (3,940) 8,754 15,760
Deferred tax
Origination and reversal of timing differences 618 748 508
Changes in tax rate (35) 47 35
Total tax (credit) / charge (3,357) 9,549 16,303
The tax charge has benefitted from a one-off adjustment in the period related
to share scheme vestings at the end of FY21.
8. Earnings per share
Basic earnings per share is calculated on profits after tax of £16,782,000
(31 March 2021: £29,778,000) and 111,295,087 (31 March 2021: 104,242,148)
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 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
Number Number Number
Thousands Thousands Thousands
Weighted average number of ordinary shares in issue during the period - basic 111,295 104,242 106,688
Dilutive effect of share awards 3,529 11,602 11,021
Diluted number of ordinary shares 114,824 115,844 117,709
9. Dividends
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Final dividend year ended 30 September 2020 (6.50p) 6,825 6,825
Interim dividend year ended 30 September 2021 (5.50p) 5,901
Final dividend year ended 30 September 2021 (8.00p) 8,943
Distribution to equity holders of Numis Corporation Plc 8,943 6,825 12,726
The Board has approved the payment of an interim dividend of 6.00p per share
(2021: interim 5.50p per share). This dividend will be payable on 21 June 2022
to shareholders on the register of members at the close of business on 20 May
2022. These financial statements do not reflect this dividend payable.
10. 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 three property leases that the Group currently uses for its
offices in London, New York and Dublin.
(b) Deferred tax
As at 31 March 2022 deferred tax assets totalling £2,987,000 (30 September
2021: £4,006,000) 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 £11,827,000 (30 September 2021: £17,035,000).
(d) Trading investments
Included within trading investments is £17,623,000 (30 September 2021:
£21,783,000) of investments held outside of the market making portfolio. The
net decrease during the period is due to disposal proceeds exceeding new
investment and unfavourable revaluation movements attributable to declining
markets.
(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 as at 31 March 2021. The cash
profits earned over the past year have more than offset cash outflows
attributable to an increased dividend, elevated buyback spend in the second
half of the prior year and investment in new offices.
11. Reconciliation of profit before tax to cash from operating
activities
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit before tax 13,425 39,327 74,150
Net finance expense 1,024 1,421 2,288
Disposal of property, plant and equipment - - 279
Depreciation charge on property, plant and equipment 873 492 1,154
Depreciation charge on right-of-use asset 1,554 1,229 3,262
Amortisation charge on intangible assets 129 75 158
Share-based payments 3,025 5,252 9,634
(Increase)/decrease in current asset trading investments 3,460 (13,412) (20,883)
(Increase)/decrease in trade and other receivables 187,573 (84,259) (141,643)
(Increase)/decrease in stock borrowing collateral (7,755) (3,547) (401)
Increase/(decrease) in trade and other payables (206,516) 57,392 149,728
(Increase)/decrease in derivatives 413 18 (611)
Cash from operating activities (2,794) 3,988 77,115
The decrease in cash from operating activities during the six months ended 31
March 2022 reflects a decrease in profitability for the period and outflows in
respect of seasonal expense items which fall within the first half of our
financial year.
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