Strong funds growth and acquisitions push Brewin Dolphin to solid results

Independent wealth management firm Brewin Dolphin Holdings reported “another strong period” of organic fund inflows in its preliminary results on Wednesday, as it continued to deliver against its strategic plan.

The FTSE 250 firm held total funds of £40.1bn at the end of the year to 30 September - an increase of 13.3%, or 11.3% excluding acquired funds.

Discretionary funds stood at £33.8bn - an increase of 17.4%, or 15.3% excluding acquired funds.

The Brewin Dolphin board compared that to an increase of 6.9% in the FTSE 100 index, and a 6.0% increase in the MSCI WMA Private Investor Balanced index.

It reported record net discretionary funds inflows, including transfers, of £2.3bn, representing an annualised growth rate of 8.0%, up from 4.4%.

Total income for the period was £304.5m, rising from £282.4m in the 2016 financial year.

Core income of £291.0m represented a 10.5% year-on-year increase, while core fee income of £207.9m was a 15.7% improvement and represented 71.4% of total core income, compared to 68.2% a year earlier.

The board said core commission income was £62.3m, down from £66.1m.

Brewin Dolphin’s financial planning income rose to £20.8m from £17.5m, while its adjusted profit before tax of £70.0m was a 14.8% rate of growth over the prior 12 months.

It adjusted profit before tax margin improved to 23.0% from 21.6%, while the board achieved its target of 25% adjusted profit before tax margin in the fourth quarter.

Statutory profit before tax was £57.6m - 15.0% higher than the 2016 full year, while the statutory profit before tax margin was 18.9%, up from 17.7% 12 months earlier.

Adjusted basic earnings per share increased by 15.8% to 20.5p, while adjusted diluted earnings per share were up 16.7% to 19.6p.

On a statutory basis, basic earnings per share were 16.5p - up from 14.4p - while statutory diluted earnings per share were 16.0p - rising from 13.9p.

The board confirmed a full-year dividend increase of 15.4% to 15.0p, with the final dividend of 10.75p per share representing an improvement of 17.5%.

“2017 was a successful year for the business,” said chief executive David Nicol.

“Building on the focus and discipline of past years and supported by continued positive markets, we have delivered a strong financial performance underpinned by record fund growth.

“I'm particularly pleased to report above target organic discretionary fund growth demonstrating the progress we are making with our strategic initiatives.”

On the operational front, Brewin Dolphin claimed “strong funds growth”, which the board said was driven by positive net inflows and the successful integration of Duncan Lawrie Asset Management.

It claimed it was well-positioned in the high-growth intermediaries led channel.

The company said its operational efficiency targets were achieved during the year, adding that it was beginning to add capacity, invest and innovate for further growth opportunities.

Its balance sheet strength remained a “key underpin” of its growth strategy, the board added.

“The rate of change in our market environment is accelerating, driven by changing client needs, continued evolution of financial regulation and government policy,” David Nicol explained.

“Against this backdrop, our advice-led proposition has enduring relevance for customers in uncertain and complex times.”

Nicol said the firm had “proven skills” in innovation and delivering constructive change.

“Building on this momentum, I am certain that Brewin Dolphin is well positioned to deliver future growth.

“The 15% increase in our dividend underlines the board's confidence in the company's future prospects and ability to perform for both our clients and shareholders in the long-term,” Nicol added.