Shore Capital profits hit

by Dave Nixon

Story link: Shore Capital profits hit

Shore Capital, the boutique investment bank, held responsible falling market values of two of its chief assets for a 29 per cent fall in pre-tax profit last year.

Shares in the company, previously down 60 per cent from its 12-month high, fell an additional 8 per cent to a new low of 35p after it cut its full-year dividend by 25 per cent to 0.875p. Pre-tax profit was £14.3m (£20.1m) in the 12 months to December, as revenue slipped 7.8 per cent to £38.8m.

The business ended the year with a 50 per cent slump in revenue and a 60 per cent drop in profit, despite achieving 60 per cent revenue growth during the first half of the year. Howard Shore, chief executive, blamed the revaluation of its Dawnay Share Hotels portfolio and a quick drop in the share price of its Puma Brandenburg German real estate fund for the dramatic turnaround.

A listed vehicle that invests in German residential, retail and office space, the Brandenburg fund saw its shares plummet by a third throughout the last six months of last year as a consequence of the market chaos. Mr Shore said the decline in share price from 120p to 80p had reduced the fund’s carrying value in the company’s accounts by £1m to £2m.

The company furthermore took a £3m hit on its stake in Dawnay following a £29m reduction in the valuation of the hotel portfolio.

Nevertheless despite the write-downs and the harsh market conditions, Mr Shore said his hunger for real estate investments had not been diminished.

The company is pushing ahead with policy to create a new fund that will provide mezzanine financing to property investors.