Numis blames political uncertainty for dive in profits

Numis Corporation on Friday reported a plunge in interim profits and revenues as domestic political uncertainty precipitated a period of weak UK investor sentiment.

The broker's profit before tax for the six month period ending 31 March came in at £7.1m, down 64% compared to the same period the year before, after revenue dived 25% lower to £55.7m.

Investment banking revenue dropped by 24% to £38.8m as deal volumes were down compared to both six-month periods of the prior year, while equities revenues fell by 28% to £16.9m, with the broker stating that the prevailing uncertainty reduced trading activity amongst its predominantly long-only institutional client base.

The AIM traded company maintained its 5.5p per share interim dividend and had cash and cash equivalents of £78.9m at the end of the period, down from £82.5m at the same point the year before.

Alex Ham and Ross Mitchinson, co-chief executive's at Numis, said: "We operate in a cyclical industry and our financial performance will always be influenced to a certain extent by market conditions. Our first half performance has been impacted by a significant slowdown in UK deal activity and investors maintaining a cautious approach toward the UK market."

The chief executives added that they remained encouraged by the business' continued progress and believed its investments in recent years provided a strong platform from which they can continue to successfully execute their strategy.

In a statement, Numis said the business is holding out for greater clarity regarding the UK political outlook, at which point an improvement in corporate and institutional client activity is expected, though the broker conceded that predicting the timing of such an improvement remained "difficult".

"We believe the current market environment, whilst uncertain in the short term, presents further opportunities for the business to advance its strategic ambitions within an evolving competitive landscape," said Ham and Mitchinson.

Numis Corporation's shares were up 0.05% at 265.62p at 1159 BST.