Broker Numis sees profits soar as it takes on larger deals

City broker Numis has seen profits rocket in the first half of its 2018 financial year, after it raked in a "material increase" in average deal fees.

The higher fees earned in its corporate broking and advisory business were due to the firm working on bigger transactions, increasing the seniority of its role on initial public offerings (IPOs) and mergers and acquisitions (M&A), and improving its "standing in the market".

Added to that Numis said the effects of the much-dreaded second Markets in Financial Instruments Directive, implemented in January, had so far had little effect on its business.

"We have established a strong reputation in the market by delivering a consistently high quality service to our clients, but now is not the time to stand still," said co-chief executives Alex Ham and Ross Mitchinson in a joint statement.

"As we look to take the business to the next level, we intend to enhance our client offering by investing further in our platform and recruiting a selective number of high calibre individuals."

Numis seemed bullish on its outlook too, as it said it was "aware of M&A becoming a higher strategic priority for corporate clients".

In its capital markets activities, which cover IPOs and block trades, Numis picked out the $546m (£403m) equity raise for Catco Reinsurance and the £575m IPO of Sabre Insurance Group as strong examples of its work.

Revenue jumped 41 per cent, to £74.1m, while earnings per share rocketed 98 per cent to 15.8p.

Though Numis's shares leapt by more than two per cent on the open, they quickly pared these gains and were down 0.24 per cent at the time of writing. Investors may have been disappointed that the dividend stayed steady at 5.5p.

Numis said it would pay a "stable ordinary dividend" and reinvest in its platform, but reinforced its "intention to use earnings and cashflow to underpin shareholder returns through a combination of dividends and share buybacks".

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