Headline figures from Brewin Dolphin (BRW) were heavily influenced by a sharp increase in exceptional costs to £38m. These included £31.7m written off as the result of problems with a new software system. The system is used successfully for execution-only business, but a number of problems prompted management to ditch plans to use it for transactions in the discretionary wealth management business.
However, adjusted pre-tax profits rose 16 per cent to £60m, while funds under management grew by 5 per cent to £36.8bn. Crucially, higher-margin discretionary funds rose by 13 per cent to £24bn, which helped push fee income ahead by 17 per cent to £177m. Commission income fell by 5 per cent to £89m, as market volatility in the second half reduced transaction volumes. Advisory funds fell by 22 per cent to £5.4bn, partly as a result of clients withdrawing funds, but also because money was successfully migrated into the discretionary business.
The new management team nearly achieved the ambitious targets it set itself earlier in the year, missing its 95 basis point core revenue yield target on discretionary funds narrowly and its 75 basis point target on advisory funds by a wider margin.
For the current year, analysts at Numis Securities are forecasting adjusted pre-tax profits of £65.8m and EPS of 18.5p.
| BREWIN DOLPHIN (BRW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 279p | MARKET VALUE: | £768m | |
| TOUCH: | 278-279p | 12-MONTH HIGH: | 358p | LOW: 237p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 112 | |
| NET ASSET VALUE: | 77p* | NET CASH: | £157m** | |
| Year to 28 Sep | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2010 | 31.4 | 9.7 | 7.1 |
| 2011 | 21.9 | 6.6 | 7.1 |
| 2012 | 29.9 | 9.1 | 7.15 |
| 2013 | 28.4 | 8.4 | 8.6 |
| 2014 | 8.6 | 2.5 | 9.9 |
| % change | -70 | -70 | +15 |
Ex-div: 5 Mar Payment: 23 Mar *Includes intangible assets of £94m, or 34p a share **Includes £21.7m of client settlement cash | |||
