Grossart empire unveils 81% rise in profits as fee income recovers
SIR Angus Grossart, Scotland’s best-known merchant banker, presided over an 81% leap in profits to £14.7m at his Noble Grossart outfit in the year to January 31.
This leap in pre-tax profits, which followed several years of relatively flat performance, is revealed in accounts obtained by The Herald from Companies House.
It was driven by a recovery in fee income, and a leap in dividends from investments in stock market-listed companies.
Fees and commissions receivable jumped from the £2.22m figure to which they had plunged in the prior financial year to £5.97m.
Investment income surged from £5.67m to £8.01m. This increase was enabled by a leap in dividend income from listed investments from £1.26m to £5.51m. In contrast, dividend income from unlisted investments more than halved from £3.82m to £1.9m.
Seventy-year-old Sir Angus has for decades been a pillar of Scotland’s financial establishment.
However, in recent years, he has been no stranger to controversy. City investor Hermes took issue with Sir Angus’s 27year reign as chairman of Scottish Investment Trust – three times the maximum term recommended from a corporate governance standpoint by the National Association of Pension Funds. Sir Angus agreed in February 2003, shortly before SIT’s annual meeting, to relinquish this position and did so later that year.
Sir Angus was, as deputy chairman of Edinburgh Fund Managers, part of a boardroom exodus at this investment house in November 2002 in the face of a rebellion by shareholders including Hermes.
Noble Grossart, as a firm, earned fees for advising both Scottish Investment Trust and Edinburgh Fund Managers during the period in which Sir Angus sat on these companies’ boards.
On a less contentious note, Noble Grossart was instrumental, with Rangers owner and metals entrepreneur David Murray and Stagecoach founders Brian Souter and Ann Gloag, in the rescue of the formerTransBus operation at Falkirk in 2004.
Renamed Alexander Dennis at the time of this ambitious deal, which saved hundreds of vital manufacturing jobs, this bus-building operation has since thrived. The accounts of Noble Grossart, which has a 30% stake in Alexander Dennis, highlight the bus-builder’s buoyant profits in the latest financial year.
T h e No b l e G r o s s a r t accounts show that the remuneration of the highest-paid director, almost certainly majority shareholder and chairman Sir Angus, rose to £514,000 in the 12 months to January 31 this year from £479,000 in the prior 12 months.
Sir Angus, a former vicechairman of Royal Bank of Scotland and major supporter of the arts, reaped dividends totalling £1.14m from his beneficial holding of 81,676 shares in Noble Grossart. Fellow director Ewan Brown’s beneficial holding of 16,300 shares brought with it a dividend of £228,200.
The dividend paid by Noble Grossart was held at £14-ashare in spite of the leap in earnings.
The 81% advance in pre-tax profits was achieved in a year in which staff costs leapt from £3.06m to £4.17m. This increase in staff costs appeared to reflect big pay rises for at least some of Noble Grossart’s staff. The average number of staff employed by Noble Grossart, including directors, fell to 17 during the 12 months to January 31 this year from 18 in the prior financial period.
SirAngus declined to return a call from The Herald yesterday about Noble Grossart’s latest financial results.
He is sparing in his remarks on the results in the accounts filed with Companies House.
In their review of the business, the directors state: “The year is reflected in our continuing steady profit performance. We have continued to provide merchant banking and related services.”
The accounts state that one of the principal risks of the business is “reputational”.
Addressing how Noble Grossart deals with this, the accounts state: “We seek to manage this risk by employing and retaining a small number of highly-experienced executives, most of whom have been employed by us for many years, ensuring that they are welltrained, engaging with clients whom we know and whose business we understand, and by arranging that any material work is reviewed by at least one other executive.”