Numis chief executive Oliver Hemsley told City A.M. old fashioned voice-broking and research gave the mid-sized brokerage an edge over larger banks as it reported record equity issuance and advisory revenues in its full year results today.
Numis share price was up 1.61 per cent by mid-morning, to 272p, having dropped 1.18 per cent to 264.6p at the open.
Group revenue was up six per cent, from £92.9m to £98m in the full year to the end of September.
Pre-tax profits rose seven per cent to £26.1m, from £24.2m. Earnings per share increased to 19.5p, from 18.7p, a four per cent rise.
The group announced a 10 per cent increase in dividends, up to 11.5p from 10.5p.
Revenues from equity issuance and advisory activities rose 22 per cent to a record high of £55.6m.
Why it's interesting
Despite subdued capital markets, and a "variable stock market" halting several IPOs Numis has had an active year, raising £2.1bn of funds though 38 equity raisings during the year including 11 IPOs for Autotrader, Aldermore, DFS and On the Beach. The group also completed 31 M&A deals.
While chief executive Oliver Hemsley told City A.M. he could "never predict the markets" he did think the strong M&A trend would be here to stay because "M&A generates cash for investment and [with less organic growth] companies' focus remains on growing through acquisition.”
The company said in a statement it had been affected by stock market volatility, and had had a "mixed performance", with falls during the first quarter offset by a return of confidence during the second and third quarters only to fall further again in the fourth quarter as concerns over China resurfaced.
Market uncertainty hit trading revenues for the year, which fell to £33.4m from £39.6m in 2014.
What Numis said
Oliver Hemsley, Numis chief executive, told City A.M. the six per cent increase in revenues “was not enormous but in the context of more volatile conditions, was not bad.
“And, we added a lot of new clients – 37. We raised the same amount of money, but saw more far more M&A. We haven't found there to be no IPOs, there is an appetite, if the price is right."
“We raised dividend 10 per cent, which shows we have confidence in the future," he added. "We've had a good start to the year, with 12 fundraisers and six IPOs since 1 October, even though the markets haven't necessarily moved up particularly."
But he said Numis has "been ahead of the market" because "we invested heavily in research, we have sales people voice broking on both sides of the Atlantic, while most big brokers go electronic, so we keep in touch with what companies want, and we're in a good position to advise clients.”
Bigger banks cover so many areas, he added, but “this is our area to focus on. We have to make this work!”