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Solid progress at Brewin Dolphin

Brewin Dolphin continues to increase funds under management, and is introducing a new dividend policy
December 4, 2013

Wealth management group Brewin Dolphin (BRW) delivered a much stronger performance than the headline figures suggest for the latest year. In fact, adding back various one-off items left adjusted pre-tax profits 22 per cent higher at £52.3m.

IC TIP: Buy at 282p

Funds under management grew from £25.9bn to £28.2bn, and a £2.7bn positive investment performance more than offset a £400m net outflow of funds. Crucially, most of the outflows came from funds managed on an advisory basis, while higher-margin discretionary funds saw a £1.1bn net inflow of funds, taking the discretionary funds total up from £18.2bn to £21.3bn, or 76 per cent of total managed and advised funds, and compared with a target of 80 per cent by 2016. Accordingly, fee income rose by 25 per cent to £152m, while commission income was 11 per cent higher at £93.5m.

There has also been a rethink on dividends, which from next year will equate to 60-80 per cent of adjusted, diluted EPS. Using forecasts from RBC Capital Markets, this means that next year's payout could rise to between 10.1p and 13.5p a share. RBC is also forecasting adjusted pre-tax profits of £61.7m and EPS of 16.9p (from £52.3m and 14.9p in 2013).

BREWIN DOLPHIN (BRW)
ORD PRICE:282pMARKET VALUE:£769m
TOUCH:281-282p12-MONTH HIGH:289pLOW: 182p
DIVIDEND YIELD:3%PE RATIO:33
NET ASSET VALUE:81p*NET CASH:£134m**

Year to 29 SepPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200921.97.407.10
201031.49.707.10
201121.96.607.10
201229.99.107.15
201328.68.508.60
% change-4-7+20

Ex-div: 26 Feb

Payment: 28 Mar

*Includes intangible assets of £127m, or 47p a share **Includes £20.3m of client settlement cash