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Timing issues, market moves haunt Patersons

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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Corporate finance employees

6th-Azure Capital26
7th-Argonaut14
8th-Patersons SecuritiesNFP
9th↑Hartleys10
10th-Regency CorporateNFP
72 corporate finance ranked by staff in corporate finance area (WA)

Assets under management or net assets ($m)

21st↓Yuuwa Capital$40.0m
22nd-Katana Capital$36.4m
23rd-Patersons Securities$2,200.0m
24th-Bentley Capital$13.5m
25th-Grandbridge$12.1m
54 fund managers ranked by assets under management or net assets

WA revenue

58th-Access Group Australia$80.0m
59th-Ross North Group$73.7m
60th↓Patersons Securities$73.4m
61st↓OrontideNFP
62nd↓Outback Travel Centres$54.8m
105 private companies - large ranked by revenue most recent financial year

Client advisers

1st-Patersons SecuritiesNFP
2nd-Hartleys46
3rd-Euroz Securities36
4th-Bell Potter Securities30
5th-CPS Capital Group26
20 stockbrokers ranked by number of client advisers in WA

Number of Employees

Corporate Finance

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