Profits soar 17% at Noble Grossart on investment income surge

NOBLE Grossart, the Edinburgh merchant bank, posted a near-17 per cent rise in profits as investment income more than trebled in the year to the end of January.

The results were driven by a surge in dividends from the company’s unlisted investments which include a stake in Scottish bus builder Alexander Dennis.

Noble Grossart increased its holding from 28 to 35 per cent during the year that the Falkirk-based manufacturer’s profits rose from £2.5 million to £3.2m.

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Ironically, the Noble Grossart accounts filed with Companies House are accompanied by a warning from chairman Sir Angus Grossart on the reliability of yearly snapshots in gauging a company’s health. The co-founder of the venerable Edinburgh institution cautions “that annual profits may only provide a limited, and perhaps fallible, measure of a company’s true condition.

“Our increased profit for the year would be a mere number, if it was not set within the broader context of our balance sheet and an understanding of our strategic long-term approach,” Grossart said. “We have never depended on the score card of short-term performance.”

Directors raised the total dividend for the year to £20 per share, up from £15 previously. This will generate a pay-out of more than £1.5m for Grossart, the bank’s biggest shareholder whose worth was last year calculated at £158m.

Fellow director Ewan Brown and wife Christine will receive £436,000 for their combined holding of 21,800 shares. Flure Grossart, Noble Grossart’s other major shareholder and daughter of the founder, will receive £877,000 on her 43,850 shares.

In addition to pre-tax profits of £8m, the accounts show a strengthening of the balance sheet as equity shareholders’ interest rose from £84.1m to £88.2m. Cash at the bank increased to £54.6m from £50.5m.

Fees and commissions received more than doubled to £5.1m. This partially offset an £8.7m loss on investments that materialised after a hefty £15.1m provision against potentially risky holdings.

The biggest gain came from the income generated by those investments, which leapt from £4m to £15.8m. Within this, dividend income from Noble Grossart’s unlisted investments surged by 528 per cent to nearly £13.8m.

The bank’s biggest unlisted investments include Alexander Dennis, a 49 per cent stake in Lloyd’s members agency Drem Holdings, 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.