Noble Grossart extols virtues of conservative accounting

MERCHANT banker Sir Angus Grossart has attacked the role played by an “endemic culture of leverage” during the financial crisis.

Grossart’s comments came as the Edinburgh merchant bank he chairs announced pre-tax profits had edged up last year and said a “strong and liquid position” means it is well placed for further progress.

In a typically colourful chairman’s statement accompanying newly-filed accounts for Noble Grossart Holdings, he said the last five years had revealed the “true effects and costs” of balance sheets which were allowed to become exposed.

Grossart said voices of experience from previous downturns were “unheard until the wolf did arrive at the door”.

“The culture of leverage was endemic, sponsored by governments, endorsed by regulators and approved by analysts and investors. It is not surprising that those with no hinterland of experience thought that the band would play on as the waters rose on the doomed ship.”

For the second year running, the company paid out more than £3 million in dividends with chairman and co-founder Grossart, the largest shareholder, collecting some £1.5m. Pre-tax profits in the year to 31 January rose 3.3 per cent to £8.3m, boosted by a £2.4m gain on investments compared to a £8.7m loss the previous year although investment income dropped to £6.1m from £15.8m.

Total income fell to £10.7m from £12.9m but net assets rose to £92.9m from £88.2m. The highest paid director at the firm, which employs 16, received £562,000, up from £548,000.

Grossart said the figures highlighted the company’s conservative approach, which sees it carry assets at cost or written down value. He said the policy reflected a “long term and hard-headed approach to business”.

The bank’s biggest unlisted investments include a 35 per cent stake in Alexander Dennis, 45 per cent each in dental specialist Wright Health Group and property manager Bellhouse Joseph and a 39 per cent stake in Major’s Place Industries, a specialist metal worker. It also owns a 29 per cent stake in art dealer The Fine Art Society.