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With tough first-half capital markets to tackle, trading at broker and investment banker Numis was inevitably a tale of two halves. However, performance picked up in the second half - funds raised for Numis' clients rose 20 per cent to £787m in the period and, in the first two months of the current year, that figure has reached £353m. "We have a strong balance sheet and have enjoyed a solid start to the new financial year," said chief executive Oliver Hemsley.
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In fact, Numis would have reported a £4.2m pre-tax profit had it not been for a £7.8m investment portfolio-related charge. Numis also absorbed a £6.9m employee share scheme-related cost. Still, cost-cutting efforts should yield annualised savings of £2.5m, even though Numis remains keen to attract quality staff. Specifically, specialist corporate financiers have joined the group, as well as a new institutional sales and investment trust team. Meanwhile, the New York office increased profits and has proved an effective channel for helping UK clients to increase their foothold in the US. Cash generation reached a healthy £20.7m - which helped to swell the cash pile. Numis is also doing well at winning new business, with a total of 16 FTSE 250 corporate clients now on its roster.
Prior to these figures, brokers' consensus estimates were for pre-tax profits of £8.67m, EPS of 5.26p.
NUMIS CORPORATION (NUM) |
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|---|---|---|---|---|
| ORD PRICE: | 173p | MARKET VALUE: | £192m | |
| TOUCH: | 170-175p | 12-MONTH HIGH: | 181p | LOW: 99p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 102p | NET CASH: | £74.3m | |
| Year to 30 Sep | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) | |
|---|---|---|---|---|
| 2005 | 39.9 | 31.3 | 3.20 | |
| 2006 | 35.7 | 25.3 | 5.00 | |
| 2007 | 38.8 | 27.5 | 7.00 | |
| 2008 | 16.1 | 14.9 | 7.50 | |
| 2009 | -10.5 | -8.40 | 8.00 | |
| % change | - | - | +7 | |
Payment: 19 Feb Ex-div: 9 Dec |
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There's a decent dividend yield, market conditions have improved and there's a reasonable pipeline of new business. Still, after a hefty re-rating since the spring, the shares look up with events. Fairly priced.
Last IC view: Fairly priced, 108p, 9 December 2009
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