Profit and dividend rise as Brewin discretionary funds motor

Chief Exec David Nicol. Picture: Contributed
Chief Exec David Nicol. Picture: Contributed
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Wealth manager Brewin Dolphin has hit four-year old profit margin targets and posted a 15 per cent hike in the dividend, as it refused to rule out further acquisitions.

It came as the group yesterday said that its underlying pre-tax profits climbed nearly 15 per cent to £70 million in the year to end-September, with its full-year dividend up 15.4 per cent at 15p.

Of the divi jump, Brewin Dolphin chief executive David Nicol said: “We are comfortable in sharing our growth with shareholders, and it still leaves healthy sums to invest.”

The company, which employs 200 in Edinburgh and about 50 across Glasgow, Dundee and Aberdeen, saw its total income for the period rise to £304.5m from £282.4m a year ago.

Total funds under management rose 13 per cent to £40 billion. But financial services analysts said the highlight was net inflows into discretionary funds of £2.3bn – up 8 per cent.

The latter are where the wealth manager runs someone’s savings to an agreed risk profile, without consulting on every individual trade.

Nicol said: “People trust us. They have more complex financial affairs than they used to, what with things like capital gains tax, ISAs etc. More than 90 per cent of our business is now in discretionary funds.”

Stuart Duncan, an analyst with broker Peel Hunt, said in a note: “Significantly, profit margins in Q4 hit 25 per cent for the first time since the target was set back in 2013.”

Duncan added that further margin improvement was likely to be driven by revenue growth as opposed to cost efficiencies.

Andrew Westenberger, Brewin Dolphin’s finance director, said: “We don’t have a new margin target. But getting to where we are has not been about costcutting, it’s been about revenue growth.

“Our headcount is flat this year. We won’t artificially drive the margin up by trying to strip out costs.”

Brewin Dolphin bought Duncan Lawrie Asset Management last year, having sold its execution-only business, Stocktrade, to Dundee-based Alliance Trust the previous year.

Nicol said the company’s focus was internally generated growth, but he added: “As with Duncan Lawrie, if other acquisition opportunities came along we would look at them.

“We are a big, strong player and there is a lot of fragmentation (in the sector). But we are not constantly coming in looking for deals.”