It has not been an easy year for wealth managers, as torrid markets have sapped asset values and investor sentiment. Fortunately, Brewin Dolphin (BRW) has a compensating self-help story. The rewards from its business restructure allowed it to increase its dividend for the year to September 2015 by a fifth.
As longer-term investors tend to sit on their hands in volatile markets, Brewin saw commission income fall by 12 per cent to £72m. But this was balanced out by an increase in fee income of 7 per cent to £189m, leaving overall income flat. The company continues to switch wealth management clients from an advisory service to a discretionary one, whereby it takes the day-to-day investment decisions. This provides a more consistent fee income. During the period, Brewin retained 76 per cent of its advisory outflows by funnelling them into discretionary or execution-only services, compared with 63 per cent last year.
The company has improved its distribution network, so that sales through third-party agents accounted for half of all discretionary inflows in the period, up from a third. As a result, it has also managed to trim its total fixed operating costs from £174.6m to £173m.
Prior to these numbers, analysts at Peel Hunt were forecasting adjusted pre-tax profits of £67m and EPS of 18.2p, compared with £62m and 17.1p in FY2015.
| BREWIN DOLPHIN (BRW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 269.4p | MARKET VALUE: | £752m | |
| TOUCH: | 269.2-269.4p | 12-MONTH HIGH: | 361p | LOW: 248p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 78p* | NET CASH: | £150m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 264 | 21.9 | 6.6 | 7.1 |
| 2012 | 270 | 29.9 | 9.1 | 7.15 |
| 2013 | 284 | 28.4 | 8.4 | 8.6 |
| 2014 | 281 | 6.8 | 2.0 | 9.9 |
| 2015 | 284 | 61.0 | 17.7 | 12.0 |
| % change | +1 | +803 | +785 | +21 |
Ex-div: 18 Feb Payment: 11 Mar *Includes intangible assets of £87m, or 31p a share | ||||
