Union back in the black: Blunden says discount house group has turned corner

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UNION Discount returned to the black at the interim stage, but almost entirely thanks to its former subsidiary Brian Winterflood Securities.

Union made pounds 11.3m in the six months to 30 June, compared with a pounds 14.8m loss last time. Almost all of the profit was due to the sale of Winterflood and the profits it made before it left the group.

George Blunden, who has just completed his first year as chief executive, said that the figures showed the troubled group had turned the corner. The shares rose 7p to 158p.

Union restated its accounts in accordance with FRS3, showing an operating profit of pounds 1.1m for the first half compared with a pounds 12.1m loss a year earlier and a loss of pounds 3.7m during the second half of 1992. Analysts viewed this as a measure of Mr Blunden's success in getting a grip on Union's leasing losses.

'A year ago I was worried by what I might find here. Now I am excited by what we might achieve over the next few years, providing we can recruit the right people,' Mr Blunden said.

He said Union was talking to several potential buyers for the loss-making asset-financing businesses that had proved such a costly diversification in the 1980s. The loan book has been wound down from pounds 112m at the end of last year to pounds 95m.

Union has not paid a dividend for three years and did not pay an interim yesterday, but Mr Blunden said the board hoped to make a payout at the end of the year, when it could be sure that profits were sustainable.

The discount house operation had a profitable first half and benefited from an injection of capital from the Winterflood sale. The Aitken-Campbell equity and gilt-edged market-making division increased profits to pounds 800,000 from pounds 500,000 last time.

Asset management profits were flat at pounds 93,000 while futures broking made a loss of pounds 89,000, compared with a pounds 102,000 profit in the six months to June 1992. Mr Blunden said the division would have a better second half.

He said he wanted to shift the balance of Union's business away from risk-taking to fee-earning. For example, Union has taken a majority stake in Guildhall, a City consultancy that advises corporations on risk management and the safe use of derivatives.