The big hike in Shore Capital's (SGR) reported profit was helped by an improved outcome at Spectrum, a holding vehicle in which it owns a 59 per cent stake. But even without Spectrum, better financial-market conditions boosted the investment group’s pre-tax profit 53 per cent to £5.65m. That beat RBC Capital Markets' estimates, and the broker has upped its 2014 EPS forecast by nearly a half to 20.8p (from 13.9p in 2013).
Spectrum, which owns German telecoms group DBD, posted improved losses of £237,000 (down from £1.2m) after the company closed its consumer operations and wrote back £1.1m of provisions. More importantly, however, DBD holds mobile-phone licenses in the lucrative 4G frequency range. The prospects associated with this exposure to the German mobile market - Europe’s largest - are compelling. Should Shore sell up, RBC Capital markets expects a "large, one-time capital gain".
Meanwhile, improving market conditions drove profits up 19 per cent to £6m at Shore’s equity capital-markets business. The corporate-finance arm was buoyed by growing demand for fundraisings and IPOs, and management says there’s a strong pipeline of similar work this year. New product launches at the asset-management arm - which is focused on such areas as venture-capital trusts and German property assets - more than doubled the unit's profit to £2m.
SHORE CAPITAL (SGR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 365p | MARKET VALUE: | £88.3m | |
| TOUCH: | 360-370p | 12-MONTH HIGH: | 365p | LOW: 188p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 253p | NET CASH: | £32.2m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)† | Dividend per share (p)† |
|---|---|---|---|---|
| 2009 | 42.4 | 75.7 | 280 | 8.8 |
| 2010 | 35.5 | 8.4 | 18.3 | 8.8 |
| 2011 | 29.5 | -0.9 | -4.5 | 5 |
| 2012 | 32.8 | 2.5 | 8.2 | 5 |
| 2013 | 35.8 | 5.4 | 14.1 | 8 |
| % change | +9 | +113 | +72 | - |
Ex-div: 26 Mar Payment: 10 Apr †Adjusted for December 2013's 1-for-10 share consolidation | ||||
