Brewin Dolphin funds perform well, earnings slide

Investment management firm Brewin Dolphin reported a 2.5% uptick in total funds in its first half on Thursday, to £32.8bn, though the costs of business restructuring seriously ate into its profits.

The FTSE 250 company reported discretionary funds of £25.9bn in the six months to 31 March, up 4.4%, which its board compared to an increase of 1.9% in the FTSE 100 index and a 3.9% ris in the FTSE WMA Private Investor Series Balanced Portfolio index.

Total net discretionary funds inflows, excluding transfers, were £0.4bn, representing an annualised growth rate of 3.2% against a rate of 4.2% in the first half of last year.

Brewin Dolphin;s core income was £126.1m, up 0.9% from £125m a year ago, which the board put down to net organic discretionary funds growth and higher financial planning income, offset by lower average market levels compared to the first half of last year.

Other income took a serious slide, down 39.7%, though it was still a marginally small figure of £11.1m in total.

Brewin Dolphin said its adjusted profit before tax for the period was £28.4m, down 12.3% on last year, with its reported profit before tax being slashed by 42.2% to £21.5m.

The board said reported profits last year were affected by a one-off gain of £9.7m.

Basic adjusted earnings per share were 8.4p during the six months, down from 9.4p, and diluted earnings per share totalled 7.9p, down from 9p.

"The first half saw further growth in our core business as well as continued progress towards achieving our long-term strategic goals,” said chief executive David Nicol.

“Despite challenging market conditions, we maintained recent growth rates in our discretionary business, while also moving firmly to execution stage on many of the growth initiatives we outlined in 2015.”

Nicol said that, in the current market context - with short-term outflows resulting from business restructuring - the first half could be described as a creditable performance.

“The underlying ability of the business to sustain organic growth, despite the poor market environment, is a reminder of the sound footings on which we are building our growth ambitions.

“The group is in hiring mode and focused on a balance of direct and intermediary-led growth to increase discretionary funds by a third over the next five years,” Nicol added.

Despite the slides in profit, Brewin Dolphin’s board declared an interim dividend of 3.85p per share, up from 3.75p last year.