In the six months to March, client funds managed by Brewin Dolphin (BRW) slipped 8 per cent to £41.4bn. Exclude acquired client mandates, and total funds actually declined 14 per cent.
With most of that drop coming from asset price falls at the end of the period, the impact on the investment manager’s bottom line was negligible. Strip out adjusted items including acquisition costs and goodwill amortisations, and basic earnings per share only edged down 2.9 per cent.
The flipside of this timing is a smaller asset pile from which to generate fees in the second half. This, together with the “high level of uncertainty” the board sees in markets, helps explain why Brewin thinks the final dividend may be “towards the lower end of the target payout ratio” of 60 to 80 per cent of adjusted diluted earnings per share.
Still, investors can point to three sources of encouragement. First, the switch to remote working has been seamless despite a spike in client engagement and demand for advice. Second, a combination of experience and wealth goals mean clients have tended to boost rather than cash-in their funds throughout the recent volatility. Third, up to £8m of cost savings have been identified for this financial year.
Liberum forecasts adjusted earnings per share of 17.1p for the 12 months to September, and 17p in FY2021.
| BREWIN DOLPHIN (BRW) | ||||
| ORD PRICE: | 271p | MARKET VALUE: | £820m | |
| TOUCH: | 270.5-271.5p | 12-MONTH HIGH: | 377p | LOW: 130p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 105p* | NET CASH: | £87.7m** | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 160 | 29.7 | 8.3 | 4.4 |
| 2020 | 175 | 28.2 | 7.3 | 4.4 |
| % change | +9 | -5 | -12 | - |
| Ex-div: | 21 May | |||
| Payment: | 12 Jun | |||
| *Includes intangible assets of £162m, or 53.4p a share. **Includes lease liabilities of £56.4m | ||||
