Profit dips at Shore Capital ahead of its purchase of Stockdale Securities
Profit dipped at corporate finance firm Shore Capital in 2018, in a year of rocky capital markets.
Read more: Shore Capital snaps up Stockdale Securities to create broking powerhouse
The figures
The Aim-listed business said profit fell 11.1 per cent to £4.1m, which it blamed on increased investments.
Revenue increased 3.4 per cent to £43.3m and its dividend remained flat at 10p per share.
Why it's interesting
Its February acquisition of Stockdale Securities has received regulatory approval and is expected to complete this month.
It paid £4.9m for Stockdale with additional deferred consideration of up to £4m subject to performance.
Shore Capital's asset management business had a strong year, growing both revenue and profit, in contrast to its capital markets business which was hit by a lack of activity in the sector, particularly in the last quarter of 2018.
Its asset management division boosted revenue 22.8 per cent to £15.8m, with profit before tax up 5.5 per cent to £3.2m.
Revenue from its capital markets business fell 6.5 per cent to £25.5m and profit before tax fell 21.9 per cent to £4.1m.
Highlights for the asset management business include agreeing a £200m funding line for its property finance operation with private equity firm Roundshield Partners.
Read more: Shore Capital's asset management arm makes up for fall in capital markets
On the corporate finance side it added FTSE 100 retailer Marks & Spencer as a client.
The company has taken new premises in London given recent expansion and the Stockdale deal, signing a lease for new offices on St James’s Street of nearly 14,000 sq ft, up from the 9,000 sq ft the business currently occupies in the capital.
What Shore Capital said
Co-chief executive Simon Fine, who leads the capital markets division, said that besides the Stockdale acquisition Shore had been hiring opportunistically. “In this environment you get the opportunity to add where you might not normally get to do so,” he said.
Read more: City broker Shore Capital closes in on deal to buy Stockdale Securities
Co-chief executive David Kaye, who heads the asset management business, said: “We are very pleased with the progress of the asset management business. We have taken the opportunity to use some of the profit generated to make some really key strategic hires across the business at a senior level and we are optimistic about what 2019 holds.”