If redundancy costs and estimates of onerous contract provisions are stripped out, the earnings were even more impressive, with pre-tax profits jumping 215% to £21.4m.
According to the fund manager, the primary driver of earnings was the continued growth in new funds within its discretionary business, which rose 6% to £22.7m, which helped core income rise 13% to £134.4m.
“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,” the group said.
Funds into its advisory business fell 29% over the period to £6bn, while execution-only funds under management roses 18%£7.4bn.
So-called 'other income', continued to fall as well, down 42% to £11.9m as a result, it said, of “declining margins on cash deposits and a further £6.1m reduction in trail income following the continued move away from trail paying unit trusts post RDR.”
On the other side of the coin, Brewin Dolphin managed to lower its fixed operating costs 4% to £91.7m while fixed salary costs fell to £51.3m on the back of restructuring-induced lower head
CEO, David Nicol, said: “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%.”
Costs on the technology side of the business are, however, set to rise over the course of the next six months as a result of the group’s decision to write off £32m and rethink parts of its software strategy.
See also: Tech failings to cost Brewins £32m
Discretionary Funds
Discretionary funds now represent a total of 79% 0f Brewin Dolphin’s total managed/advised funds, but the group says there remains some work to do to move the bring the yield from the business up to a sustainable level of 75 basis points, from the 56 bps earned last year.
The reason for this remains that roughly 40% of the group’s managed advisory business has yet to move onto “new standard national pricing structures”.
According to Brewins, some progress has been made in this regard during the period, with the yield rising during the sixmonths to 61 basis points but, “some delays have occurred as a result of ensuring that client communication was fair and appropriate”.
But, it adds, the intention is to complete this move by the end of the 2014.
Looking forward
Brewin Dolphin remains bullish on the outlook for markets, despite “lacklustre European growth”.
And, for the wealth management space, it says, it is encouraged by the recent budget announcements.
Adding: “These results build on the positive trends of the last twelve months…Tackling the Group's legacy issues will take time. We are committed, however, to ongoing improvement and strengthening of the business and will continue to make the difficult decisions necessary to achieve this, as evidenced by the refocused systems priorities.”
