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Numis rides choppy markets

The broker is increasingly providing corporate advice to bolster revenue from equity issuance
December 3, 2015

Numis (NUM) made further progress in its transition from broker to corporate adviser in its 2015 financial year. Large-scale corporate projects such as Micro Focus's reverse acquisition of Attachmate, as well as a growing share of the volatile equity issuance market, helped increase its corporate transaction income by a fifth to £56m.

IC TIP: Buy

This is just as well, because that same market instability reduced its commission and trading revenue from market-making activities on behalf of institution clients by 16 per cent to £33m. The good news here is that the company's research and execution commissions have not yet been hit by a regulatory move to unbundle these services from the fees charged to clients. Indeed, the European Commission has suggested that the implementation of the Markets in Financial Instruments Directive II, which includes the unbundling rules, could be delayed from January 2017 to January 2018, giving brokers more time to work out how to monitise their research arms.

Numis's asset management subsidiary had a busy year, making an investment in Crowdcube, the equity crowdfunding platform. "We believe in the power of technology to change business," says Numis executive director Lorna Tilbian. As well as giving Numis a stake in this fast-growing market, the acquisition could add another element to its range of IPO services. The asset management arm will also act as investment manager to a new mid-cap fund set up with seed capital.

NUMIS CORPORATION (NUM)
ORD PRICE:269pMARKET VALUE:£304m
TOUCH:260-275p12-MONTH HIGH:278pLOW: 200p
DIVIDEND YIELD:4.3%PE RATIO:14
NET ASSET VALUE:102pNET CASH:£59.6m

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201154.20.2-0.78
201250.14.23.28
201377.722.616.99
201492.924.418.710.5
201598.026.119.511.5
% change+6+7+4+10

Ex-div: 10 Dec

Payment: 19 Feb