Smith's fivefold leap still fails to impress

SMITH NEW COURT, one of the UK's leading securities houses, announced pre-tax profits up fivefold to pounds 31.1m for the six months to 29 October on the back of revived corporate activity and an expansion into non-domestic equities, which now account for 60 per cent of Smith's earnings.

Smith's shares fell 11p to 411p, however, as the figures had been well flagged and there was slight disappointment that profits were down compared to the second half of 1992, when the group made pounds 32m. Michael Marks, chief executive, said that revenues were well spread and there were substantial profits from domestic as well as international equities. Smith had benefited from the recovery in UK rights issues, he said.

The chief executive attacked a 'slight misconception' in the media that Smith's earnings are exceptionally volatile because of the way they are linked to stock market volumes and the risks the group takes. He said that Smith was happy to stick to market making and had not participated in the recent boom in proprietary trading.

The most exciting areas of expansion for Smith are China, Latin America and the Indian subcontinent, according to Mr Marks. The firm is opening offices in Buenos Aires and Shanghai and planning another in India.

Fully diluted earnings per share were 25.0p, against 6.1p in the first half of last year. Smith declared an interim dividend of 2p against half that last time, designed to reduce in part the disparity between the interim and final payments.

The firm's August rights issue, together with the proceeds from the exercise of some of its warrants and share options, raised pounds 45.1m to finance expansion.

Mr Marks said he was delighted at the growth in the group's capital and reserves from pounds 109.7m at the year-end to pounds 175.3m at 29 October 1993.

The London Stock Exchange said that November was the busiest month ever for equity trading in London. Combined turnover value in UK and overseas stocks hit pounds 110.5bn, more than pounds 1bn higher than the record set in August 1993 of pounds 109.3bn.

It was also the busiest month for companies joing the market, with 42 entrants bringing the total for the year to 158.