THE past and the future combined in the present to hit stockbroker Patersons Securities' profitability.
The Perth-based national broker's net profit was cut by more than 60 per cent to $3.6 million on revenue of $97.6 million, as Patersons absorbed the costs inflicted by a rogue trader in Canberra three years ago, as well as the expenses of establishing a new funds management division, which it sees as a long-term project.
Patersons executive chairman Michael Manford said the poor state of the markets also played a part in the poor result for the 2007-08 financial year, as it had done for many of the mid-tier brokers around the country.
Local competitor Hartleys booked a net profit of $16.75 million for the year to June 30 2008, up from $11.67 million the previous year, while Euroz experienced an 89 per cent rise in annual net profit to $41.93 million.
Mr Manford said the firm would look for opportunities to take on staff or assets in the current down-turn, believing it was well-positioned to do so having increased its expenditure on development and support functions within the private client business.
"Our strategy has been in place for a number of years, that will remain unchanged," he said.
This year, Patersons had to find $1.8 million from its own pockets to finalise most of the remaining claims from Canberra and pay legal costs. That came straight off the bottom line, whereas a previous $4.4 million settlement was covered by insurance.
Mr Manford was confident of the direction of the Patersons Asset Management, despite the decision to shelve a resources fund after it failed to reach its $50 million minimum subscription level and the lacklustre start of its 80:20 Equity Fund.
Both funds were launched to the market early this year. The 80:20 venture has raised $8 million, compared to a target of about $50 million, but Mr Manford said he still hoped to see that build to a $100 million fund.
"The timing was not perfect in terms of setting that up," he said.
Patersons has about $800 million in funds under administration and a further $240 million in managed discretionary accounts.
Patersons has also entered into a deed of company arrangement with a client that owes the firm $3.7 million.
In other broking news, DJ Carmichael & Co and Montagu Stockbrokers were reported earlier this week as holding merger talks.
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