The return of a bull market was good news for stockbroker and fund manager Brewin Dolphin (BRW). The company announced a 8.5 per cent rise in funds under management (FUM) to £28.1bn in the six-month period and a 26 per cent hike in underlying pre-tax profits to £23.8m. The reported profits in our table were distorted, somewhat, by £9.2m of redundancy costs and provisions for onerous leases; a £1.1m additional FSCS levy; and £6.5m of amoritisation charges.
Market movements contributed most of the increase in FUM, but the rapid changes in the asset management industry brought about by the retail distribution review (RDR) also had an impact. For example, Brewin experienced a £6m fall in trail income - the controversial fees that funds pay to brokers in return for client funds - as the practice is phased out to allow fund managers to comply with new payment regulations. In addition, the company announced separately that it will raise £40m by placing 19m new shares with institutional investors. The extra cash will help secure Brewin's already strong balance sheet by boosting its regulatory solvency cover to at least 150 per cent.
New chief executive David Nicol said Brewin Dolphin would remain a bespoke client-based organisation and reiterated the target of achieving a 20 per cent operating margin by 2015.
Broker Numis Securities forecasts full-year operating profits of £51m and EPS of 14.9p, rising to £68.8m and 20.2p next year (up from £42.1m and 12.2p in 2012).
BREWIN DOLPHIN (BRW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 216p | MARKET VALUE: | £546m | |
| TOUCH: | 215-216p | 12-MONTH HIGH: | 225p | LOW: 135p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 67p* | NET CASH: | £73m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 123 | 12.3 | 3.70 | 3.55 |
| 2013 | 132 | 6.9 | 2.20 | 3.55 |
| % change | +7 | -44 | -41 | - |
Ex-div: 12 Jun Payment: 28 Jun *Includes intangible assets of £129m, or 51p a share | ||||
