George Blunden, chief executive, said a pounds 2m loss from Union's gilts trading arm reinforced the group's determination to pull out of unhedged trading in bonds. Overall, money market trading lost pounds 953,000. Derivatives trading also performed worse than expected thanks to 'unacceptably high levels of execution errors'.
A pounds 665,000 loss in the division contributed to an overall loss of pounds 793,000, compared with last year's first-half profit of pounds 5.8m.
The collapse into the red pushed the shares 8p lower to 126p. The rights issue in March was pitched at 150p a share.
Mr Blunden said: 'The losses in the gilt-edged market and derivatives operations are clearly disappointing. It is of little comfort that we were not alone in suffering the consequences of extremely adverse market conditions.'
He added that Union would focus on its fund management division, where it had been increasing staff numbers. An Isle of Man office had been opened and, once regulatory approval had been achieved, the company would start developing offshore products.
The division lost pounds 271,000 in the half-year thanks to the cost of setting up the new operation, but there had been a 20 per cent increase in its client base towards the end of the period.Reuse content