Union surges off the lease: Nightmare ends with return to profit and resumed payout

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The Independent Online
UNION, the financial services group formerly known as Union Discount, paid a dividend for the first time since 1991 and returned to profit after putting a series of leasing disasters behind it.

The company made a pre-tax profit of pounds 4.5m for 1993, against a pounds 16.2m loss last time, severed its last links with term finance via a provision of pounds 6.7m, and securitised pounds 42m of its pounds 65m in remaining leases and hire-purchase agreements.

George Blunden, Union's chief executive, said the company had been restructured and could now build on the six remaining businesses, and search for new ones, through organic growth or acquisitions.

Just two divisions - derivatives broking and consulting services - made a loss last year, the latter only because of start-up costs, said Mr Blunden. 'I hope that in the last quarter or half of this year, all the divisions will be moving on to the footing we are looking for.'

Alex Robinson, an analyst at Kleinwort Benson, said: 'This is an interesting little recovery stock. It's got a lot of fingers in the right pies. Aitken Campbell (which makes markets in equities and gilt-edged stocks) and the fund management side should both make more money.'

Ms Robinson forecast a pounds 6m profit for 1994 and a prospective price earnings multiple of 12 to 15. The shares rose 7p to 202p.

Ian Martin, who joined Union as managing director last year from Baring Securities, said the 3p final payout marked the start of a progressive dividend policy with a prudent level of cover.

The group paid redundancy costs of pounds 450,000 but retained one of its leasing subsidiaries, Sabre Leasing, as a profitable operation. Union made an overall operating profit of pounds 4.4m, Mr Martin said, and would pay 33 per cent tax.

The group's traditional money market activities produced profits of pounds 2.1m, helped by a new arbitrage desk. Aitken made pounds 741,000 and the fund management side pounds 103,000. Mr Martin said the derivatives broking operation was expanding into Europe and should return to profit by the end of the year.