Brooks Macdonald hikes dividend even as profit slips

Brooks Macdonald reported funds under management of £16.8bn in its final results on Thursday, making for a 7.5% increase from the prior year's £15.7bn.

The AIM-traded company said every quarter in the year ended 30 June saw positive net flows, with the total annual percentage coming in at 5.2% for the group, up from 4.8% in 2022.

It said the third quarter demonstrated the most growth, peaking at 9.2%.

The group said its investment performance stood at 2.3% for the year, surpassing the 1.6% increase recorded by the MSCI PIMFA Private Investor Balanced Index.

Revenue rose 1.3% to £123.8m, credited to positive net flows, improved investment performance, added revenue from acquisitions, and increased interest income, even though product mix effects somewhat countered those gains.

Despite challenging market conditions and mounting cost pressures, the group reported an underlying profit of £30.3m, reflecting a healthy profit margin of 24.5%.

That was slightly reduced from the £34.5m and 28.2% margin seen in 2022 but remained in line with the group's commitment to achieving top-quartile margins.

The company said it remained in a strong capital position, boasting a substantial balance sheet and providing more than the necessary buffer over the stipulated regulatory capital requirements.

Its board approved a 5.6% dividend increase, making it the 18th consecutive year since the shares began trading on AIM.

Looking ahead, Brooks Macdonald said it expected a continuation of positive net flows for 2024.

However, it foresaw potential challenges due to macroeconomic factors that could influence the first quarter and medium-term net flow objectives.

Fluctuations in the product mix were expected to keep impacting the average revenue yield.

The group said it anticipated deriving more benefits from its alliance with SS&C, especially as funds under management saw a medium-term increase.

Brooks Macdonald said it remained keen to review potential acquisitions aligned with its organic growth strategy.

In response to the FCA's newly introduced Consumer Duty Principle, Brooks Macdonald added that its processes and client-centric approach were suited to ensure the best outcomes for retail customers.

“I'm pleased to report a year of strategic progress and solid financial performance for Brooks Macdonald, highlighting once more the resilience of our strategy and our business model,” said chief executive officer Andrew Shepherd.

“Despite market headwinds, we delivered 5.2% net flows and robust underlying profit margin.

“Although the economic climate continued to affect investor sentiment, we delivered consistent positive net flows, demonstrating the strength of both our proposition and our relationships with clients and advisers.”

Shepherd said that looking ahead, the firm’s focus remained on ensuring it was well-positioned to support clients, advisers, and its people.

“This underpins our ambition and the plans we have in place to take advantage of the long-term opportunity.

“Supported by a strong capital position, our proven strategy, and motivated people, we look to the future with confidence.”

At 1139 BST, shares in Brooks Macdonald Group were down 2.85% at 1,875p.

Reporting by Josh White for Sharecast.com.