Brooks Macdonald hikes dividend despite lower revenue

2nd Mar 2023 12:19

(Sharecast News) - Brooks Macdonald Group reported a solid first-half financial performance on Thursday, despite volatile macroeconomic conditions.

The AIM-traded company said total funds under management (FUM) reached £16.2bn in the six months ended 31 December, up 3.6% over the half-year, with continuing positive net flows totalling £347m.

Annualised net flows of 4.4% were recorded for the period, compared to 4.0% for the same period last year.

Brooks Macdonald Investment Solutions (BMIS) and Platform Managed Portfolio Service (PMPS) were the drivers of the company's core UK discretionary business, experiencing strong growth, with combined annualised net flows of 52.6%.

That was partly offset by net outflows in the Bespoke Portfolio Service (BPS), due to weaker investor sentiment and extended lead times.

Revenue declined 4.8% to £58.9m, which the board said was driven by the impact of volatile markets on average funds under management, lower transaction-related revenues, and the repricing of the Cornelian Risk Managed Fund (RMF) range.

However, that was partly offset by continuing positive net flows and higher interest income.

The group's underlying profit before tax was in line with its prior guidance at £14.5m, compared to £17.6m in the same period a year earlier.

Its underlying profit margin was 24.6%, continuing its commitment to top quartile underlying profit margin.

Statutory profit after tax came in at £8.2m, versus £10.2m in the first half of the 2022 financial year, and underlying diluted earnings per share were 72.5p, down from 85.4p year-on-year.

Despite the volatile macroeconomic backdrop, the board raised the interim dividend by 7.7% to 28p, which it put down to the company's strong capital position, and its continuing confidence in the firm's prospects.

The outlook for the year remained in line with prior guidance, with full year net flows expected to be between 5% and 6%, primarily driven by Platform MPS and BMIS.

"I am encouraged by our underlying profit margin for the half year remaining robust at close to 25%, a reflection of continued cost discipline offsetting the impact of difficult markets on our funds under management and hence our revenue," said chief executive officer Andrew Shepherd.

"Overall, our financial performance for the period was solid with positive net flows demonstrating continuing intermediary and client demand for our products and services.

"This performance enabled us to increase our interim dividend by 8%, delivering continued returns for our shareholders."

Shepherd said the company's purpose was "realising ambitions and securing futures", adding that it had stayed close to its clients and intermediaries when they needed it most.

"We are confident in our strategy, we are making good progress and I remain optimistic about our long-term prospects.

"Although the short-term macroeconomic outlook remains uncertain, we are well positioned to take advantage of the growth opportunities ahead."

At 1150 GMT, shares in Brooks Macdonald Group were up 1.49% at 2,040p.

Reporting by Josh White for Sharecast.com.