13th May 2020 11:17
(Alliance News) - Brewin Dolphin Holdings PLC on Wednesday reported a drop in funds under management over the first half, but the FTSE 250 wealth manager maintained its dividend.
At March 31, FUM stood at GBP41.4 billion, down 8.0% from the GBP45.0 billion seen at September 30 and 2.4% lower than the GBP42.4 billion recorded at the same point a year before.
Brewin's Discretionary funds slipped 11% over the last six months to GBP35.7 billion. Within Discretionary funds, the Direct and Intermediaries classes lost 12% over the first half, MPS was down 2.6% and Indirect was 9.4% lower.
Elsewhere, Execution Only funds fell 5.1% to GBP3.7 billion, but Advisory funds more than doubled to GBP1.8 billion.
In the first half, Brewin recorded GBP1.7 billion inflows, with net inflows of GBP600 million. Offsetting this, however, was a GBP6.9 billion hit from investment performance. Direct Discretionary funds shed GBP4.1 billion from its investment performance.
Chief Executive David Nicol said: "In the first half of 2020, we delivered a resilient set of results, notwithstanding the negative impact of Covid-19 on global markets towards the end of the second quarter. We saw a greater level of direct inflows in the first half, with strong demand for integrated wealth management service. We have a strong balance sheet and good cash generation although we need to be mindful of the high level of uncertainty for the remainder of the financial year. We continue to monitor the impacts on the business and maintain strong cost discipline."
In the six months to March 31, pretax profit was down 5.1% year on year to GBP28.2 million from GBP29.7 million.
Brewin's operating costs rose 10% to GBP146.8 million, due to a 9.3% rise in staff costs to GBP98.3 million.
Revenue, however, was 9.1% higher at GBP175.0 million from GBP160.4 million. Fees and Commission income from Discretionary clients were up 3.2% and 19% year-on-year, respectively.
The fund manager kept its interim dividend unchanged at 4.4 pence per share.
"As a profitable cash generative business, the group has to consider the needs of all stakeholders including regulators, employees, shareholders and savers (including pensioners) who look to Brewin as a source of reliable income," Brewin said.
The company targets a payout ratio of 60% to 80% of annual adjusted diluted earnings per share. Looking ahead to the final dividend, Brewin will look to continue this policy but will be mindful of the market conditions, it said.
"The board will need to consider its 2020 full year performance and take into account market conditions in the second half of the year and the potential impact on income through 2021, so the dividend can grow into the future," Brewin added.
The company continued: "It is likely that the board will recommend a final dividend that may be towards the lower end of the target payout ratio. Therefore if market levels remain consistent with those we are currently experiencing and earnings are lower, the final dividend would reflect this."
Shares in Brewin Dolphin were down 0.7% at 267.10 pence each.
By Paul McGowan; [email protected]
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