Numis maintains 'robust' balance sheet amid difficult trading

Numis Corporation said in its interim results on Friday that, despite facing unfavourable market conditions, it maintained a robust balance sheet position in the first half, with strong liquidity and capital positions.

The AIM-traded firm said revenue for the period ended 31 March totalled £63.8m, down 14% compared to the prior period, due to subdued market activity.

Its profit before tax slid 55% to £6.0m, which the board put down to the operational gearing in the business.

Investment banking revenues declined 12% as low capital markets activity was partially offset by record performance in the advisory business.

The company’s advisory revenues were up 40% year-on-year, with average fees up 204% compared to the first half of the 2022 financial year, as Numis started to build a broader pipeline of merger and acquisition transactions.

On the other hand, capital markets revenues were down 52% as UK ECM volumes dropped to a 10-year low.

Equities revenues also saw a decline of 17%, due to weak second-quarter trading performance.

Despite the challenging market conditions, the company said it managed to maintain resilient shareholder returns, with an interim dividend of 6p consistent with the prior year, and a further £4.4m spent on share repurchases.

The company's strategic highlights included the recent agreement reached between the board of Numis and the management board of Deutsche Bank on the terms of a recommended all-cash offer by Deutsche for the entire issued and to-be-issued share capital of Numis.

Further details on the timetable of the offer would be announced in due course, the board confirmed.

Looking ahead, the company said the general macroeconomic sentiment continued to weigh on the outlook for the investment banking industry.

However, the advisory business was continuing to perform well, and had a “good pipeline” of both buy-side and sell-side mandates for a range of clients.

Capital markets volumes were likely to remain relatively low, but there were some emerging indications that the historic lows experienced recently could give way to better conditions in the second half.

“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,” said co-chief executive officers Alex Ham and Ross Mitchinson in a joint statement.

“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 6p per share.”

Ham and Mitchinson added that, while capital market volumes were likely to remain relatively low over the near-term, Numis had started to see emerging indications that the second half could see relatively better conditions.

“Irrespective of the market environment, the financial position of the group remains resilient and our capital position strong.”

At 1000 BST, shares in Numis Corporation were down 0.02% at 340.92p.

Reporting by Josh White for Sharecast.com.