Annual Report and Accounts 2014 Contents Who we Are 1 Awards and Achievements 1 1.0 Overview Numis at a Glance 2 Chairman’s Statement 4 Financial Highlights 4 2.0 Strategic Report Introduction 6 Our Strategy 6 Our Business Model 7 Key Performance Indicators 8 Review of Performance 10 Principal Risks 12 Financial Position 14 Our People 14 Outlook 14 3.0 Corporate Governance Board of Directors 15 Corporate Governance Report 16 Remuneration Report 21 4.0 Directors’ Responsibilities and Report Directors’ Responsibilities 24 Directors’ Report 25 5.0 Independent Auditors’ Report 28 6.0 Financial Statements Consolidated Income Statement 30 Consolidated Statement of Comprehensive Income 31 Consolidated Balance Sheet 32 Consolidated Statement of Changes in Equity 33 Consolidated Statement of Cash Flows 34 Company Balance Sheet 35 Company Statement of Changes in Equity 36 Notes to the Financial Statements 37 7.0 Other information Notice of Annual General Meeting 73 Case Studies 78 Information for Shareholders 80 Numis Corporation Plc 2014 Annual Report and Accounts 1 Who we Are We are one of the UK’s leading independent institutional What can we do for you? If you have a business and We offer a full range stockbrokers and corporate advisors. We are recognised want advice, access to funds or better recognition of research, execution, as being one of the leaders in helping raise capital for UK in the market, then get in touch and we’ll show you corporate broking and listed companies. Relentless in the pursuit of success for how we can make a difference. corporate finance services our clients, we are acknowledged for the quality of our to companies quoted in people and our focus on providing old fashioned client the UK and their investors. service and advice, set in a modern context. Independent, driven and above all client focused, Numis has a very strong culture of integrity and hard work. Our partnership ethos drives long-term relationships and echoes the service culture of the past. Awards and Achievements For the last six years, we have been rated in the top 3 in the Numis Smaller Companies Index continues to Extel survey for small capitalisation UK stocks. In 2013 be the defining benchmark for the universe of and 2014, we were voted the top-ranked UK Small & Mid UK smaller companies. Cap Brokerage Firm by both institutions and companies. For full details, see Thomson Reuters Extel survey. The Thomson Reuters Extel Results 2014 are summarised below: Vote from Fund Managers 1st 1st 2nd UK Small & Mid Cap Research in the following sectors: Corporate Broking UK Small & Mid Cap: Construction / Financials / Leisure & Gaming / Media / UK Small & Mid Cap / Insurance Research / Mining / Technology / Sales UK Small & Mid Cap / Chemicals Research / Alternative Investment Funds Sales / Trading / 1st 1st 3rd for last seven years based on brokers with the most UK Stock Market Awards Best brokers by Region, FTSE 250 coverage each year, Starmine FTSE 250 2012 / 2013 Europe, Bloomberg Best Recommendations March 2010 1st 4th Hemscott FTSE AIM UK 50 Clients, October 2009, TIM Ideas, Top Performer July 2010 of 160 Mid-Tier Brokerages 2012 2 Overview Numis Corporation Plc 2014 Annual Report and Accounts 1.0 Overview Numis at a Glance Listed on AIM and with We serve a diverse range of corporate clients across 16 sectors. Coverage, number of offices in London and individual companies New York, Numis is one of the UK’s most respected institutional stockbrokers and corporate advisors. Small Cap AIM FTSE 250 Other FTSE 100 59 62 36 13 1 We help companies achieve their goals by sourcing the capital they need to fuel Split of funds raised investment in their products, services and people. in 2014, by value 62% £1,292m IPO 37% £769m Secondary 1% £10m Retail Bonds Numis Corporation Plc 2014 Annual Report and Accounts 3 1.0 Overview We provide in-depth, high quality research which is one of the most valuable tools Coverage, number of in any investment decision. individual companies 400 146 142 57 Investment Companies FTSE Outside FTSE FTSE and Funds 250 350 100 We provide powerful distribution and execution giving us a leading market share Market share by sector in UK Small & Mid Cap stocks. 4.6% AIM 5.6% FTSE 250 9.9% FTSE Fledgling 10.1% FTSE Small Cap Source: LSE Direct Customer Business, by value, calendar year to 30 September 2014. 4 Numis Corporation Plc 2014 Annual Report and Accounts 1.0 Overview Chairman’s Statement The business performed Performance distribution and execution capabilities and is testament well during 2014 against Numis is in great shape and has had an excellent year. to the hard work of our staff whose drive and dedication a background of market The years following the credit crunch were years when provide the platform for the Group’s future success. conditions that were Numis invested in its people, its systems, its controls Dividend favourable to equity and most importantly its client relationships. Over the issuance. last five years our corporate client base has expanded We are proposing a final dividend of 5.5p per share from 122 to 171. Where we have sown we have now (2013: 5.0p per share) which brings the total dividend reaped. During the year we handled 16 IPOs (2013: 7), for the year to 10.5p per share (2013: 9.0p per share), grew our revenues 20% to £92.9m (2013: £77.7m) and an increase of 17% on 2013. The increase in payout reflects grew our adjusted profits 22% to £30.5m (2013: £25.0m). the strong results achieved, the strength of our cash Our performance in 2014 is reviewed in more detail in position and our confidence in the future. our strategic report on page 10. The Board has implemented a Dividend Re-Investment We also performed well for our clients in helping them Plan (DRIP) in place of the SCRIP Dividend Scheme for raise £2.1bn of finance (2013: £2.2bn) of equity finance. the final dividend for 2014. Existing shareholders are, At the same time we added both quantity and quality to therefore, being offered the facility to elect to use their our corporate client base which we believe is testament cash dividend to buy additional shares in Numis, the to our focus on building and maintaining long-term main benefit being that the Company does not need relationships. We will continue to focus our efforts on to issue new shares and dilute shareholders. The Board providing them with exceptional client service and believe that this approach is in the best interests of advice. The key performance indicators we use to assess the Company. our performance are described on page 8 and include Regulatory environment both financial and non-financial performance indicators. The pace of regulatory change has not abated over the External recognition of the quality of our people and past year. We see an ever increasing volume of regulation service was reinforced in the 2014 Thomson Reuters being aimed at the financial services industry and are Extel survey in which Numis was voted No.1 UK Small allocating an increasing amount of internal resource and Mid Cap Brokerage Firm by both companies and in order to monitor its impact on our business model as fund managers for the second year in succession. This well as presenting our own thoughts in response to demonstrates the exceptional quality of our research, consultations put forward by the FCA. Financial Highlights Revenue Total dividend per share 2014 2014 £92.9m 10.5p 2013 2013 £77.7m 9.00p Numis Corporation Plc 2014 Annual Report and Accounts 5 1.0 Overview It is clear that regulatory change can and should be to the Board as executive Directors, both of whom instrumental in both reducing risk and increasing have been instrumental in overseeing the growth of the protection. It is also clear that putting the clients’ business. Details of each member of the Board are set interests at the centre of a business model is wholly out in our Corporate Governance Report on page 16. appropriate and something we fully support. People We strongly believe that all regulation must be Results such as these provide an opportunity to thank accompanied by a strong internal culture which the management team and staff. Led by Oliver Hemsley, demands that we strive to attain the highest ethical they have done an outstanding job and demonstrated and professional standards. An overarching governance huge energy and vigour in serving our clients. framework is essential in ensuring that the principles of good governance are maintained and that this Celebrating the year past is all too brief a moment. culture is driven from, and by, the Board downwards. The team is now addressing the challenges of the new Details of our governance framework are described financial year. As always, the markets we operate in rarely in our Corporate Governance Report on page 16. stay still, but we are confident that our market position and our experience and commitment to our clients The Board provide the base for future success. During the year our previous Chairman, Sir David Arculus, retired after five years of service as our Chairman. Also during the year, Tom Bartlam retired as an independent Gerald Corbett Non-executive Director and chairman of the Remuneration Chairman Committee after eight years on the Board. I would like to take this opportunity to thank them both for their 12 December 2014 considerable contribution and dedication. We welcome Robert Sutton and Catherine James who were appointed to the Board as Non-executive Directors during May 2014 and who together bring a considerable breadth of relevant knowledge to the Board.