Brewin Dolphin reports strong first half ahead of takeover by RBC

Brewin Dolphin reported “strong” organic fund inflows of £1.9bn in its first half on Wednesday, as its takeover by RBC Wealth Management loomed, pending shareholder and regulatory approval.
RBC made its cash offer to acquire Brewin Dolphin on 31 March, at 515p per share, with the deal expected to complete by the end of the third calendar quarter.

The FTSE 250 company said gross discretionary inflows totalled £1.9bn for the six months ended 31 March, up from £1.6bn year-on-year.

It said that continued organic growth was driven by the firm’s “advice-focussed” strategy and its range of propositions and investment solutions.

Total discretionary net flows came in at £1.0bn for an annualised growth rate of 4%, with MPS and Voyager net flows growing at an annualised 16.4% to £0.5bn, and direct client retention rates improving to 99% from 97% for the full 2021 financial year.

The company said total funds for the first half were “broadly flat” at £56.3bn, compared to £56.9bn, due to volatile market performance driven by the war in Ukraine and the macroeconomic environment.

Total discretionary funds were broadly flat in the first half, and up 8.1% year-on-year, at £49.4bn.

Brewin Dolphin said total income increased 4.8% year-on-year to £209.5m, driven by higher fund levels year-on-year, partly offset by normalised levels of commission, as expected.

Financial planning income grew 24.6% year-on-year to £23.8m, which the board put down to higher fund levels year-on-year and continued demand for its advice-focussed services.

Direct discretionary commission income fell 15.4% year-on-year to £32.3m, as expected.

The company reported adjusted profit before tax 2.3% higher at £48.1m, and a “strong” cash balance of £139.8m, down from £145.8m a year earlier, with a capital adequacy ratio of 210%.

Following the announcement of the recommended offer for the company by RBC, the board said it was not recommending an interim dividend.

Looking ahead, Brewin Dolphin said that while markets remained volatile, its “strong” inflows and “resilient” advice-focused strategy gave it confidence in its full-year outlook.

It was making n changes to its operational expenditure guidance of mid-high single digit percent growth.

Full year capital expenditure guidance, meanwhile, was hiked to £32m from £26m, of which £26m was on its custody and settlement system.

The board said the cost increase on the custody and settlement system was being driven by higher-than-expected inflationary pressure on technology costs, with delivery now set to the end of summer, as the firm focussed on mitigating any implementation risks.

“We continued to see strong inflows across both our direct and indirect discretionary funds throughout the first half, with a record first quarter performance despite the volatility in the markets driven by macroeconomic and geopolitical challenges,” said chief executive officer Robin Beer.

“The resilience in our organic growth, demonstrates our strategy of being an advice-focused wealth manager, supported by our broad range of propositions and investment solutions, is the right one.

“The business is preparing for the final stage of dress rehearsals and training on our new custody and settlement system and the switch over of systems will be completed at the end of the summer this year.”

Beer said the company believed that the proposed acquisition by RBC would bring “new and exciting” opportunities for its clients and people.

“Whilst the transaction is still to complete, we remain focused on delivering our strategic priorities for the year, which will enable us to become a leading advice-focused digitally enabled wealth manager.”

At 0940 BST, shares in Brewin Dolphin were flat at 513p.

Reporting by Josh White at Sharecast.com.

Featured News

This Week’s Most Read

Wealth DFM