28th May 2014 07:12
LONDON (Alliance News) - Brewin Dolphin Holdings PLC Wednesday reported a sharp increase in first-half pretax profit, thanks to stronger equity markets and lower costs.
In a statement, the UK wealth manager said it made a GBP21.4 million pretax profit in the six months ended March 31, compared with GBP6.8 million in the corresponding period a year earlier.
Excluding redundancy costs, an additional Financial Services Compensation Scheme levy, onerous lease contracts provision and certain amortisation charges, pretax profit increased to GBP29.7 million, from GBP23.7 million.
Income increased to GBP146.3 million, from GBP139.0 million, with revenue growth offsetting a decline in other operating income. Operating expenses fell to GBP125.2 million, from GBP132.5 million, as its restructuring programme continued.
However, the results exclude a previously announced pretax impairment charge of about GBP32 million against intangible assets, set to be taken in the second-half, after Brewin Dolphin decided against rolling out the JHC Systems Figaro software into the discretionary wealth management business.
Income growth was due to growth in new funds managed within Brewin Dolphin's discretionary service, due to recovering equity markets. This offset a decline in other income, due to declining margins on cash deposits and a further reduction in trail income as Brewin Dolphin moves away from trail paying unit trusts in the wake of new regulations, known as the retail distribution review, aimed at increasing transparency of payments in the sector.
Funds under management increased by GBP1.2 billion to GBP36.1 billion over the course of the first-half, driven by net inflows and positive market movement on its discretionary funds, and positive market movement offsetting net outflows in its managed and advised funds.
"The group has made good financial and operational progress over the first half of 2014. The process of streamlining the business is on track and this is reflected in the significant progress made towards the adjusted profit before tax margin target of 25%. It is encouraging to see the rationalisation of the business model begin to bear fruit as organic growth is achieved," Chief Executive David Nicol said in a statement.
"We are committed to continued improvement and strengthening of the business and will continue to make the difficult decisions necessary to achieve this as evidenced by the refocused systems priorities. The streamlining of the business through improved operating processes and clearer focus on core services should not only secure further shareholder returns, but also substantially reduce risk," the CEO added.
Brewin Dolphin increased its interim dividend to 3.65 pence, from 3.55 pence.
Brewin Dolphin shares were Wednesday quoted at 304.00 pence, up 0.3%.
By Samuel Agini; [email protected]; @samuelagini
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