Numis maintains dividend as interim profits fall by over a third

A scarcity of flotations and dealmaking has seen revenues and profits fall at small and mid-cap broker Numis Corporation in the first half of its financial year, but the interim dividend was held and trading in the second half started "very well".

Numis, which also announced that founder Oliver Hemsley was standing down from the board with immediate effect, made £52.4m of revenues in the six months to 31 March, a decline of 8% compared to this time last year, while profit before tax tumbled 38% to £10.5m.

Earnings per share fell 35% to 8.0p but the half-time dividend was kept at 5.5p, with cash balances little changed at £71.2m.

The fall in turnover was due to a decrease in corporate broking and advisory business, which fell to £29.0m from £38.9m a year ago as it carried out two initial public offers, 18 secondary fund raises and received 17 mandates to advise on M&A activity, as well as carrying out nine block trades.

Numis ended the period acting as broker to 199 companies, exactly the same number as it finished the last financial year, with a mean market cap of £637m but a median of £276m.

This decline in CB&A was offset by a strong performance in the equities division, where institutional commission and trading revenues jumped 31% to £23.4m to match the highest level recorded for a half year period.

Numis's sales team provides a service to more than 440 active institutional clients, analysts cover 370 companies and it provides execution services in over London-listed 670 stocks, of which more than 500 are full listed; while a US office provides service marketing UK equities to major North American institutional investors.

"Whilst there was an overall increase in market volume and value traded, we continue to gain market share of direct customer business and to prosper despite the rise of electronic trading systems and dark pools of liquidity," Numis said.

The strong start to the second half has seen 10 fund raises completed, generating fees of over £10m, with equities revenues continuing to run at the high levels seen in the first half.

"The recent call for a general election in the UK during the summer as well as geo-political events further afield will undoubtedly cause an element of uncertainty," the broker conceded, but said it had a robust strong deal pipeline and was confident of a satisfactory outcome for the full year.