Numis full-year profit drops as it boosts headcount

Numis reported a 17.4% drop in full-year profit on Wednesday, with staff-related costs up as it boosted its headcount.

In the year to 30 September, pre-tax profit declined to £31.6m from £38.3m the year before even as revenue rose 4.6% to £136m and the client base grew by 15%.

The broker attributed the drop in profits to its investment in more staff, with the average headcount up by 15% as a result of hiring across the business. Staff costs rose 10.6% in the year to £64.7m, while non-staff costs were up 17.5% to £31m as Numis incurred costs related to the implementation of MiFID II and additional variable costs in relation to the higher headcount.

Meanwhile, the operating margin fell to 21.8% from 26.7% the year before as a result of the investment in the business.

Co-chief executive officers Alex Ham and Ross Mitchinson said: "We are pleased to report another year of record revenue alongside making substantial strategic progress toward our ambition of building the investment bank of a generation.

"This has been a year of investment in people which, whilst impacting profitability, has strengthened our competitive position, expanded the range of services available to our clients and enhanced the overall quality of the Numis platform.

"Whilst market conditions have become more challenging in the past couple of months, our focus will continue to be on clients, responding to their needs and requirements as we seek to build our investment banking business and become the leading UK equities platform. Our culture and people are central to our ambitions and we are grateful to all our staff whose commitment, drive and collaborative approach have delivered growth across the business this year. "

At 0930 GMT, the shares were down 2.2% to 271p.