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Brewin Dolphin sees fund boost

RESULTS: Brewin Dolphin is benefiting from a further switch into discretionary funds and a new computer system is set to boost margins - but that good news is looking priced-in
December 5, 2012

Brewin Dolphin (BRW) delivered an impressive full-year performance, given the tough trading climate, with total managed funds at the investment manager rising from £24bn to £25.9bn. Within that, funds managed on a discretionary basis - where management fees are higher - rose from £15.6bn to £18.2bn, with clients continuing to shift their funds across from being managed on an advisory basis.

IC TIP: Hold at 190p

That switch by investors - to a discretionary basis - boosted fee income by nearly 14 per cent in the period to £182.6m, although this was partly offset by a 16 per cent fall in commission income to £86.9m. Fund inflows of £1.5bn were offset by £1.1bn of outflows and £0.5bn transferred to execution only - but a positive market performance boosted funds by £2bn. Net cash outflow grew to £13.4m, much of which reflected expenditure on acquiring teams of investment managers and computer software. Although the move to a new computer system - which will take two years to complete - is expected to result in a significant increase in margins.

Numis Securities is forecasting a cash profit of £50.1m for 2013, giving EPS of 14.5p (2012: £42.1m/12.5p).

BREWIN DOLPHIN (BRW)
ORD PRICE:190pMARKET VALUE:£474m
TOUCH:189-191p12-MONTH HIGH:191pLOW: 128p
DIVIDEND YIELD:3.8%PE RATIO:21
NET ASSET VALUE:65p*NET CASH:£72m

Year to 30 SepPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200832.012.47.10
200921.97.407.10
201031.49.707.10
201121.96.607.10
201229.99.107.15
% change+37+38+1

Ex-div: 6 Mar

Payment: 8 Apr

*Includes intangible assets of £121m, or 48p a share