Broker Numis has today announced profit before tax for the year ended 30 September dropped 17 per cent to £38.3m.
Numis said an investment in staff that led to a 16.2 per cent increase in headcount as well as increased technology cost and costs incurred applying with the new Mifid II regulations had dented profits, despite an increase in revenue.
Revenue was up 4.6 per cent at £136m, boosted by 5.9 per cent revenue growth in equities to £47.5m and a 3.9 per cent growth in corporate broking and advisory to £88.6m.
However, staff costs rose 10.6 per cent to £64.7m with non-staff costs up 17.5 per cent to £31m, leaving operating margin 4.8 points down at 21.8 per cent.
Revenue per head was down 9.1 per cent at £538,000 and earnings per share fell 8.4 per cent to 25.1p.
Co-chief executive Ross Mitchinson told City A.M.: ”Profits were down but that’s the result of a deliberate and significant investment during the period which we think is for the good of the company.”
Mitchinson said that Numis thought the new Mifid II regulations would create some “dislocation in the industry and might create opportunities” to make hires.
“It is always right to hire brilliant people,” he said.
Co-chief executive Alex Ham said the broker has also been recruiting graduates, adding nine in recent months as it tries to position the business for the next five to 10 years.
The broker market is currently awash with rumours about mergers but Mitchinson said that was not something he focused on.
“In the 12-24 months post-Mifid II there will probably be some forced consolidation among our competitors but it is not something we worry about,” he said.
Ham said Brexit was “causing uncertainty right now, you can see there is less activity than there has been.”
But said: “we are floating [investment platform] AJ Bell today and brilliant, first-class entrepreneur-led businesses like that will be well-received, but the market has become more selective.”
Numis' shares fell steeply in September when it warned that profits were expected to be lower than last year after a hiring spree.
On today's announcement its shares fell 1.4 per cent.