Although the first-half margin erosion at Brooks Macdonald (BRK) had been flagged to the market, some investors still saw fit to sell down holdings. A shift by clients to flat, all-in fees plus lower dealing volumes weighed on revenue yields, but management is trying to get its house in order, including moves to sell the property management business to sharpen its focus on core operations.
Unfortunately, it also meant incurring a £5.5m provision to take care of legacy issues at its former Spearpoint business. However, in the asset gathering side, Brooks continued to benefit from its well-established intermediary relationships. Discretionary funds under management grew by a quarter to £11.7bn, set against a 4.3 per cent rise in the MSCI WMA Private Investor Balanced Index during the period.
It gained net inflows of £0.8bn, which was more than double the total during the same time the previous year. The fund business led the way, with multi-asset products proving particularly popular. Encouragingly, management says the higher-margin bespoke portfolio service also grew assets, as clients continued to take advantage of pensions freedom changes.
Analysts at Shore Capital forecast adjusted pre-tax profit of £18.3m during the year to June 2018, giving EPS of 112.9p (from £18.4m and 115.3p in 2017).
| BROOKS MACDONALD (BRK) | ||||
| ORD PRICE: | 2,130p | MARKET VALUE: | £294m | |
| TOUCH: | 2,130-2,170p | 12-MONTH HIGH: | 2,582p | LOW: 1,810p |
| DIVIDEND YIELD: | 2% | PE RATIO: | na | |
| NET ASSET VALUE: | 602p* | NET CASH: | £26.9m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 44.0 | 8.15 | 48.5 | 15 |
| 2017 | 49.8 | 0.65 | -3.5 | 17 |
| % change | +13 | -92 | - | +13 |
| Ex-div: | 22 Mar | |||
| Payment: | 24 Apr | |||
| *Includes intangible assets of £61.4m, or 445p a share | ||||
