Despite a decline in profits – skewed in large part by a one-off gain in the comparable figures – Brewin Dolphin also posted record gross new discretionary fund inflows of £2.4 billion during the year to 30 September. That 17 per cent increase on the previous year was achieved despite a “volatile and uncertain” backdrop that chief executive David Nicol said has in some ways played into the firm’s hands.
“Actually what we have seen in the momentum in the last part of the year is an uptake in inflows and the number of clients coming in for advice,” he said.
“We are operating in Britain, and our clients are predominantly British-based. Unlike others whose business crosses borders into Europe and are seeing the negative impacts, the Brexit thing is probably working opposite for us.”
Profits before tax fell to £50.1m, down 18 per cent on the year before. However, much of the near-£11m shortfall was linked to a £9.7m gain in the earlier year on the sale of its holding in Euroclear, the Belgium-based specialist in the settlement of securities transactions.
There were also exceptional costs of £4.6m in the latest year, including £2.7m for redundancy as total headcount across the firm’s 28 offices fell to 1,538 from 1,693 a year earlier. Nicol said there was a “small reduction” in Scotland, where Brewin Dolphin employs 275 people across offices in Aberdeen, Dundee, Edinburgh and Glasgow.
The firm has spent the last three years restructuring away from its roots in stockbroking into a modern wealth management operation with an increasing focus on discretionary fund management. Total funds under management were up 10.6 per cent at £35.4 billion, of which £28.9bn was from discretionary funds.
Nicol highlighted this, as well as an 8 per rise in the full-year dividend to 13p, as evidence of “encouraging progress”.
“We have got a very strong balance sheet,” he said. “We are a lot more efficient than we were previously.”
Despite the decline in profits, the results were ahead of analysts’ expectations. Peter Lenardos of RBC Capital said that Brewin Dolphin had “takeover potential” in a market that has been rife with mergers and acquisitions, particularly at the middle level.