City stockbroker and corporate adviser Numis has seen its share price dip this morning, despite a healthy increase in revenues and profits.
Aim-listed Numis saw its profits leap by 18 per cent this morning, to £38.3m, after a strong second half of trading which saw it bounce back from first-half losses.
Revenue also lifted by 16 per cent, to a record high of £130.1m, in a year which saw the firm knock JP Morgan Cazenove off the top spot of the City's most popular stockbroker. However the dividend remained flat on last year at 12p.
Numis completed 101 transactions over the year, including equity fund raises worth £2.5bn. It now has 202 corporate clients with an average market value of £726m, up 28 per cent year-on-year.
Why it's interesting
Despite Numis's successes, the firm's share price dipped by 1.87 per cent in morning trading as it seemed investors were expecting more. After announcing that profits would hit a record high in a trading update in October, shareholders may have been hoping for an uplift in the dividend.
However, at a time when the second Markets in Financial Instruments Directive (Mifid II) is hanging over brokers like a black cloud, Numis appears to be on top of the storm. It said that its 12 per cent year-on-year growth in institutional commissions "was achieved despite changes to institutional broker payment models as they look to embrace Mifid II".
Some growth was driven by positive market conditions, the broker said, as low volatility boosted trading on the London Stock Exchange. Numis was also helped out by a "return" of mergers and acquisitions in the second half, which it attributed to a weak pound and "availability of cheap finance".
However it did note that its own Mifid-proofing had led to a rise in costs year-on-year. The increase in non-compensation costs of £1.7m "was driven mainly by investment in our technology platform, Mifid II and other regulatory project work".
What Numis said
"Our deal pipeline is strong and we remain determined to support ambitious companies of all sizes seeking capital and high quality advice to grow, whilst simultaneously investing in our people, platform and relationships," said chief executives Alex Ham and Ross Mitchinson in a joint statement.
"Our deal pipeline is strong and we remain determined to support ambitious companies of all sizes seeking capital and high quality advice to grow, whilst simultaneously investing in our people, platform and relationships."