Thin trading squeezes SNC interim

LOW stock market turnover in Britain and Japan drove profits down at Smith New Court by 11 per cent in the six months to 30 October.

The UK's only independent quoted stockbroking group reported pre-tax profits of pounds 6.7m for the half-year, down from pounds 7.5m in the corresponding period a year ago. The interim dividend was unchanged at 1p.

Michael Marks, chief executive, said that low UK stock exchange volumes in June and July, uncertainty surrounding the Maastricht treaty, and lack of equities turnover in Japan had deflated profits. But share volumes have rebounded in recent months.

'September and October were better. On balance, given the volumes on the Stock Exchange, we're quite pleased with the results,' Mr Marks said. 'Since we came out of the ERM there is no doubt that the UK market is more firmly based in volume terms, and that's all that counts for us.'

But the broker's shares fell 5p to 100p yesterday, reflecting slight stock market disappointment with the results.

Karen Neale, analyst with Barclays de Zoete Wedd, said: 'The results were not sparkling, but they were well explained' - by quiet stock markets, low corporate finance activity, and hiring of new staff in Europe.

She estimated that for the full year the broker's profits were likely to fall slightly to pounds 16.5m from a buoyant pounds 18.4m last year, when it did a lucrative deal buying an ICI stake for Hanson. Nevertheless, Mr Marks said Smith New Court's market share had improved marginally during the period. Ms Neale estimated that the firm boasted a share of 19 per cent in market-making, and 9 per cent in commission- generating agency stockbroking business. Mr Marks said that although SNC 'didn't make any money' in Japan, business in Hong Kong was good despite the current turmoil. South- east Asia is viewed as a growth area for the firm, which is the only UK stockbroker with full exchange membership in Hong Kong, Singapore and Malaysia.

The broker floated two new share issues in China during the six months, valued at a total of dollars 300m. In the UK, its bigger deals included flotation of MFI as a public company and the demerger of Chubb and Racal. Half of SNC's profits come from its businesses outside the UK.