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Shares in stockbroker Numis rose 11 per cent as it reported early signs of a recovery in companies’ appetite for fundraising.
The past year has been difficult across the industry with depressed trading volumes and few corporate transactions.
Oliver Hemsley, Numis’s chief executive, said: “The current atmosphere of uncertainty over the Eurozone is likely to continue for some time.”
He added: “UK companies are beginning to accept that [and] to get on with their lives.” He said that the company had a “strong pipeline” of initial public offerings.
Numis reported a pre-tax loss of £1.1m for the six months to March 31 against a profit of £1,000 in the same period last year as tough conditions took their toll.
Numis is the second-largest London broker by number of corporate clients with 141, behind JPMorgan Cazenove.
It raised £177m for corporate clients in the period, and added 11 companies to its client list, helping its revenue from corporate clients to rise 4 per cent to £9.7m. A 22 per cent fall in revenue from institutional clients meant that group turnover declined 12 per cent to £23.5m.
Mr Hemsley said that the decline in institutional revenue was due to a combination of pressure on broking commission rates, the migration of trading to electronic platforms, and low trading volumes in the period.
Although lower staff bonuses helped to reduce administrative expenses by 7 per cent, this was not enough to prevent the company from posting a pre-tax loss for the period.
A contributing factor was a charge of £3.6m for a share incentive scheme. Mr Hemsley said that this related to commitments made to new staff who joined over the past five years, and that such awards were now less generous. The scheme’s impact on Numis’s profits was now “beginning to run off”, he said.
Numis, which has net cash of £40.8m, might consider an acquisition of another broker if the opportunity arose, although it had no immediate takeover plans, he added. Several brokers have succumbed to acquisitions in the past year, including Evolution Group and Collins Stewart.
Numis briefly considered buying the broker Hoare Govett, which was ultimately acquired from Royal Bank of Scotland by Jefferies in February. It did buy the Hoare Govett Smaller Companies Index, the benchmark for many small-cap fund managers, which now bears Numis’s name.
A tax credit of £511,000 helped Numis to narrow the diluted loss per share for the period from 0.8p to 0.6p. The interim dividend was kept at 4p.
The shares closed up 11.1 per cent at 90p.