The shift towards discretionary wealth management and away from advisory business should benefit Brewin Dolphin (BRW) in the long term by providing more stable fee income. However, the immediate consequence has been continuing transfers from its advisory funds, where commission rates are higher. This held back group revenue during the 12 months to the end of September. In fact, investment advisory income was down more than a third on the previous year at £15.7m.
Importantly, discretionary flows kept coming, with net fund inflows of £1.1bn, broadly level with the comparable period. Coupled with a positive investment performance, this means total discretionary funds under management stood at £28.9bn. Consolidating its offices to build larger teams has resulted in an elevated level of outflows in direct discretionary business, but management expects this to decline during the next 12 months. Growing its intermediary network provided net inflows of £0.6bn.
The wealth manager is also forging better links with legal groups, developing specialist services for solicitors and their clients, legal and accounting firm partners and corporate advisers. Analysts at Numis expect adjusted pre-tax profits of £69.6m for the 12 months to September 2017, leading to EPS of 19.1p (up from £61m and 16.8p in FY2016).
BREWIN DOLPHIN (BRW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 280.5p | MARKET VALUE: | £794m | |
| TOUCH: | 280-281.2p | 12-MONTH HIGH: | 319p | LOW: 207p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 86p* | NET CASH: | £171m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2016 | 282 | 50.1 | 14.4 | 13.0 |
| % change | -1 | -18 | -19 | +8 |
Ex-div: 16 Feb Payment: 10 Mar *Includes intangible assets of £81m, or 29p a share | ||||
