Brewin Dolphin makes margin progress in first half

28th May 2014 07:08

- FuM up 3.4 per cent to 36.1m pounds- PBT up 25 per cent- Dividend of 3.65p short of consensusDiscretionary wealth manager Brewin Dolphin demonstrated mostly good progress as new management under Chief Executive David Nicol wrestled the business back on track, with first-half profits ahead of expectations, but a slightly lower dividend.Funds under management grew 3.4% to £36.1m in the six months to March 30th, with adjusted profit before tax rising 25% to £29.7m and adjusted diluted earnings up 21% to 8.6p per share. An interim dividend of 3.65p was short of consensus expectations of 3.75p per share.Widening profit margins are one of the chief targets of Nicol's team that joined in March 2013 and the first-half's profits growth tax was driven by efficiency improvements that led to an increase in adjusted pre-tax profit margin to 20.3%, as well as increased income.Nicol said: "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."Overall income growth resulted primarily from increasing core income, up 13% to £134.4m thanks to stronger equity markets leading to continued growth in new funds managed within the discretionary service. Income from other services remained flat against the same period last year, with the loss of advisory client funds resulting from the remaining service and pricing reviews being offset by the retention of funds at new standardised fee rates. Other income continued to fall due to the imposition of new Retail Distribution Review laws, slipping 42% to £11.9m as margins decline on cash deposits trail income dwindles.An update on the upheaval in the company's technology system, where the roll-out of the Figaro system has been terminated by the board as it "no longer believes it would be an appropriate operating system for the group's discretionary wealth management business or to support the group's strategic aims and new margin target of 25% by 2016".Nicol stressed that his team was committed to "continued improvement and strengthening of the business" and will continue to make decisions necessary to achieve this as evidenced by this decision. "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," he said.OH