Despite a difficult end to 2018 for wealth managers, shares in Brooks Macdonald (BRK) have started to find renewed support, particularly now the group has taken some difficult decisions on legacy issues stemming from its 2012 Spearpoint acquisition. Brooks has spent the best part of 18 months being “proactive”, tackling matters relating to several discretionary portfolios formerly managed by Spearpoint, and a Dublin-based fund for which Spearpoint acted as investment manager.
Although chief executive Caroline Connellan insists that the group has accepted no legal liability, it has a “deep commitment to treating customers fairly”. As of the end of the first half, 82 per cent of goodwill offers to discretionary portfolio clients had been accepted, with an agreement in principle also reached with the new directors of the Dublin-based fund. Overall, a £12m provision still stands.
As for the rest of the first half, funds under management of £11.9bn fell 4.5 per over the period, albeit offset partly by net new business worth £241m. Meanwhile, higher revenue yields also lifted fee income, despite lower market levels at the end of the year.
Analysts at Numis still expect pre-tax profits of £19.8m for the year ending June 2019, giving EPS of 116p, compared with £18.1m and 118p in FY2018.
| BROOKS MACDONALD (BRK) | ||||
| ORD PRICE: | 1,737.5p | MARKET VALUE: | £242m | |
| TOUCH: | 1,725-1,750p | 12-MONTH HIGH: | 2,200p | LOW: 1,368p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 52 | |
| NET ASSET VALUE: | 589p* | NET CASH: | £24.8m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 48.3 | 0.46 | 0.1 | 17.0 |
| 2018 | 52.0 | 0.49 | -5.9 | 19.0 |
| % change | +8 | +6 | - | +12 |
| Ex-div: | 21 Mar | |||
| Payment: | 23 Apr | |||
| *Includes intangible assets of £51.4m, or 370p a share | ||||
