City broker Numis profits plunge due to political uncertainty
Numis saw profits slide 64 per cent in the first half of the year as the City broker was affected by a slowdown in UK dealmaking and weakening investor sentiment due to the political uncertainty caused by Brexit.
The figures
Shares fell 3.9 per cent after the AIM-listed company reported profit before tax dropped to £7.1m in the six months to the end of March, down from £19.5m in the previous year.
Read more: Numis sees revenues plunge amid Brexit uncertainty and lower share prices
Earnings per share were 5.4p, down 65.8 per cent from 15.9p and revenue fell 24.9 per cent from £74.1m to £55.7m. Cash was also down by 4.4 per cent to 78.9m.
The company maintained its 5.5p dividend.
Why it’s interesting
Numis said its first half performance was hit by “domestic political uncertainty, volatile equity markets and a material decline in transaction activity.”
It blamed its poor performance on the Brexit stalemate in parliament, saying that the uncertainty facing the UK has “inhibited” corporate client activity and resulted in lower merger and acquisition activity and a reduction in equity capital market transactions.
The company also reported a loss connected to the underwriting of the Kier rights issue, which dragged its equities trading revenue down to £400,000.
What Numis said
Alex Ham and Ross Mitchinson, co-chief executives, said: “We operate in a cyclical industry and our financial performance will always be influenced to a certain extent by market conditions.
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“Our first half performance has been impacted by a significant slowdown in UK deal activity and investors maintaining a cautious approach toward the UK market.
“However, we are encouraged by the continued progress of the business and believe our investment in recent years provides a strong platform from which we can continue to successfully execute our strategy.”