Brooks Macdonald returns to positive net flows in first half

Brooks Macdonald reported a “strong” financial performance in its first half on Thursday, with total funds under management rising 5.3% over the half-year to reach £17.3bn.

The AIM-traded investment manager described “positive and increasing” net flows over the six months ended 31 December, swinging to a positive £326m, from a negative £367m net flow a year earlier.

It said annualised net flows came in at 4.7% in the second quarter, up from 3.1% in the first and swinging from a negative 2% for the 2021 financial year.

Brooks Macdonald recorded a positive investment performance of 3.3% for the half year.

Its revenue increased by 10.7% to £61.9m, driven by improving positive net flows and a complete half-year contribution from its acquisition of Lloyds Banking Group's Channel Islands funds and wealth management business, partly offset by lower transaction-related revenues.

Underlying profit before tax rose 25.7% to £17.6m, with its underlying profit margin up 3.3 percentage points to a new high of 28.4%.

That, the company said, was driven by higher revenue and continued cost discipline, delivering on its commitment to a top quartile underlying profit margin.

Statutory profit before tax fell, however, by 6.4% to £13.2m, with the decrease driven by an exceptional gain in the first half of the 2021 financial year related to the Lloyds Channel Islands acquisition.

Underlying basic earnings per share increased 20.7% to 88.6p.

In line with its progressive dividend policy, Brooks Macdonald raised the interim dividend by 13% to 26p.

The group also worked to reassure shareholders over the current situation in Ukraine, confirming it had “no direct exposure” to Russia in its discretionary client portfolios or its funds.

It said its indirect exposure, through holdings in third-party funds in the client portfolios, was around 0.1% of total funds under management.

The board said those holdings were being monitored closely, adding that it was engaging with third-party fund managers where appropriate.

, CEO, commented:

“We are announcing these results against the backdrop of the human tragedy unfolding in Ukraine,” said chief executive officer Andrew Shepherd.

“During these troubled times, our thoughts are with those who are directly and indirectly affected, and we have made a donation towards humanitarian aid efforts in the region on behalf of the group and BM Foundation.

“This is a challenging time for investors and we are grateful for the trust they continue to place in us, as they have done for over 30 years.”

Shepherd said he was “pleased” the company had grown the assets managed on behalf of clients to more than £17bn - up 12% on last year.

“Although the short-term macroeconomic outlook is highly uncertain, looking ahead we remain confident in our long-term prospects building on our ambitious organic and inorganic growth strategy, grounded in our purpose of realising ambitions and securing futures.”

At 1215 GMT, shares in Brooks Macdonald Group were up 2.93% at 2,243.9p.