Funds under management reach record levels at Brooks Macdonald

Investment manager Brooks Macdonald said on Thursday that its total funds under management reached a record level of £15.5bn at its half-year on 31 December, representing an increase of 13.3% in the period.

The AIM-traded company said that was driven by “robust” investment performance of 9.5% despite volatile markets, compared to an increase of 6.5% in the MSCI PIMFA Private Investor Balanced Index.

It said net outflows narrowed to £367m, from £506m a year earlier, with the second quarter stronger than the first, evidencing early signs of an improving trend.

During the period, the firm completed the acquisition of Lloyds Banking Group's Channel Islands funds and wealth management business.

Revenue increased 1.8% to £55.9m year-on-year, with the positive impact on average funds under management of strong investment performance and two acquisitions partly offset by weaker net flows, particularly in the first quarter.

Underlying profit before tax rose 21.7% to £14m, with a “significantly increased” underlying profit margin of 25.1%, compared to 20.9% 12 months earlier, driven by higher revenue and strong cost discipline.

Statutory profit before tax grew 84.1% to £14.1m, which the board put down to the improved underlying performance and an exceptional gain related to the Lloyds Channel Islands acquisition.

Underlying diluted earnings per share rose 8.3% to 73.2p, reflecting higher total underlying earnings, partly offset by the issue of new shares in relation to the acquisition of Cornelian Asset Managers Group.

Group net flows had been “marginally positive” in the calendar year to the end of February, the board said, excluding the Defensive Capital Fund (DCF), which was continuing to experience outflows in line with trends in the targeted absolute return sector.

Net flows at the group level were expected to be “modestly positive” for the second half.

The directors raised the company’s interim dividend by 9.5% to 23p, in line with its progressive dividend policy, which they said underlined their confidence in Brooks Macdonald's strong balance sheet and future prospects.

“We continued to make good progress in the first half of the year, delivering strong financial performance as we moved into the next phase of our strategy, focused on accelerating growth and value creation,” said chief executive officer Caroline Connellan.

“Our ongoing robust investment performance, coupled with high-quality acquisitions, brought funds under management to record levels and, alongside strong cost discipline, resulted in record underlying profit margin.

“This shows that the investment we have made and the actions we have taken are delivering financial and strategic benefits for the business now and positioning us well for the future.”

Connellan said that looking ahead, client sentiment had held up well and, although the timescale for the easing of lockdown restrictions remained uncertain, the company still had a positive outlook.

“Momentum is building in the business and we are on track to meet full year profit expectations.”

At 1055 GMT, shares in Brooks Macdonald were up 1.37% at 2,012.2p.