Staff costs push profits lower at Numis

Investment banking group Numis Corporation updated the market on its trading for the year ending 30 September on Friday, reporting a “good trading performance” in the year, although it said revenue in the second half did not reach the level achieved in a “particularly strong” first half.

The AIM-traded firm said that as a result, it expected to report that full-year core revenue increased by approximately 3%.

Its retained client base delivered consistent transaction activity levels during the year, although average fees were lower and the timing of deals in Corporate Broking & Advisory (CB&A) impacted the second half.

However, the board said CB&A revenue for the full-year was expected to be ahead of the prior year, with increased average fees year on year, and the directors “encouraged” by the immediate pipeline.

Equities reportedly continued to perform well, and were also expected to deliver revenue ahead of the prior year with no material variation in performance in the second half compared to the first half.

Following the introduction of MiFID II, Numis said it was “encouraged” by the response of its institutional clients and the lack of impact it had on its business.

It said it believed the quality of its service, and the strength of its institutional relationships, enabled the business to maintain positive momentum through the period of regulatory transition.

Following an unprecedented period of senior-level hiring, targeted at broadening its capabilities and the enhancement of client service across the business, headcount grew 16% over the year with staff related costs “materially higher” than the prior year.

As a result, profits were expected to be lower than last year.

“Investment in talented individuals across the business has been a key priority during the year as we seek to strengthen and diversify the business for the future,” said co-chief executive officers Alex Ham and Ross Mitchinson in a statement.

“Our track record and reputation has been a significant factor in our ability to attract highly respected individuals to the business.”

Ham and Mitchinson said they believed Numis was “very well positioned” to capture further market share in the near term.

“Whilst deal related revenue was lower in the second half, our pipeline for the coming months is very strong and we are excited about the prospects for the business as we approach 2019.”

Numis said it would announce preliminary results for the year ending 30 September on 5 December.