Sept 24 Financial services company Close
Brothers Group Plc reported a 24 percent rise in
adjusted operating profit and said it expected increased market
activity to boost its securities business.
Adjusted operating profit at the company's securities unit,
which has two divisions Winterflood and Seydler, rose 5 percent
to 25.7 million pounds ($41.2 million) in the year ended July
The company said IPO activity in the UK last year was well
below pre-financial crisis levels and new money raised on AIM,
which generates higher margin trades for Winterflood, continued
to be at historically low levels.
"In August, market volumes across the board in equities on
the London Stock Exchange were up 10 percent and AIM market
volumes were up 24 percent. We are very well positioned to
capitalise on the opportunity which have been there in August
and September," Chief Executive Preben Prebensen told Reuters.
The jump in volumes on AIM followed the implementation of a
government plan in early August to let people invest in small
firms while avoiding tax to help drive economic recovery.
Winterflood, which offers trading services to institutional
investors, accounted for about 66 percent of the securities
Adjusted operating profit at Seydler, which offers equity
and debt capital market services mainly to mid-sized companies
in Germany, jumped to 7.9 million pounds from 1.3 million pounds
a year earlier.
"The securities business had a relatively good second half.
This business has been very cyclically challenged, being heavily
exposed to UK retail business and to AIM," BofA Merrill Lynch
analyst Philip Middleton said in a note.
Close Brothers' full-year adjusted operating profit rose 24
percent to 166.5 million pounds as lending at its core banking
unit increased and the asset management business returned to
Operating margin of the asset management business, which
recently concluded a four-year restructuring programme, was 5
percent. Operating margin in this business is expected to rise
to 15 percent by 2015, CEO Prebensen said.
"The asset management and securities business remain geared
to any sustained market recovery. The group's ROE (return on
equity) of 15.8 percent compares well with the big banks,"
Panmure Gordon analysts George O'Connor and Adam Lawson said in
a note to clients.
The asset management unit swung to an adjusted full-year
operating profit of 4.0 million pounds from a loss of 4.3
Core banking adjusted operating profit increased 17 percent
to 157.8 million pounds.
The company said it would pay a final dividend of 29.5 pence
per share for the period, higher than the 27.5 pence paid in the
Shares in the British company were up 2.7 percent at 1163
pence at 1126 GMT on the London Stock Exchange.