City Asset Management hit by 98% drop in pre-tax profit

City Asset Management has seen its pre-tax profit fall 98% as ‘sluggish’ markets hampered growth.

The firm posted an after-tax loss of £22,644 for the year ended 30 September 2011 compared to 2010’s respectable £944,244 profit.

‘Sluggish securities markets were mainly responsible for a fall of 14.2% in the company’s turnover to £5.29 million (2010: £6.17 million)’, the firm said.

‘Net profit before tax declined by 98% to £23,137 (2010: £1.34 million) reflecting this fall in turnover as well as reduced interest income and high overheads.’

Speaking to Wealth Manager, managing director Viv Coghill said: 'The year in question was one in which investment in additional human resources took place and although stock markets made modest progress, operational income was generally below the levels of the previous year with a consequential fall in profits during 2010-2011. We see signs that the global economic is slowly starting to pick up and we remain optimistic about the outlook for the current year.'

The firm's accounts said that last year's ‘near static market levels’ were reflected in a 5% fall in its investment management fee income, as well as the departure of several client managers and their clients in the second half.

Assets under management stood at £329.5 million compared to £346.7 million in September 2010.

Against the gloomy economic climes City Asset Management has strengthen its human resources team and said it had recruited a number of ‘experienced individuals’ including three more client facing investment specialists.

It said it anticipates 2012 will be ‘challenging’ but was encouraged by inflows from new clients, and was optimistic it could make progress despite the difficult economic climate.

The changes to City's human resources and investment team were followed its decision to male its proposition more accessible to advisers through the launch of its cautious and balanced portfolios on Skandia’s platforms.