Writing in the group’s half yearly report, chairman, Christopher Knight said, after investing into this business over the last three years, it now expects the business to move into profit for the 2015-16 financial year and beyond.
“This is important as while the business has been growing well from a funds under management perspective, it will make a net contribution to the Group for the first time in 2016,” Knight said.
This news comes alongside results for the rest of the group, which saw organic growth of 6% over the six months to end December 2014 to £6.95bn, on the back of £165m in investment performance and £238m in net new business.
Property assets under administration totalled £1.091bn (£1.071bn), advisory assets £457m (2013: £374m) and third party assets under administration over £225m (2013: over £160m), the firm reported.
While growth in its discretionary business, its investment performance came in worse than analysts were expecting.
According to Numis Securities’David McCann, while “there remains a good long term opportunity for Brooks to continue growing AuM faster than most listed peers (due to a lower base AuM and pensions bias to flows) and deliver profit margin improvement from c.20% to the high 20s+ long term, it appears to be struggling to deliver the latter at the moment.”
He added: “Until we have more visibility on when the company will start to deliver on its potential to achieve some positive operational gearing, we see no need for investors to buy into the stock in the short term.”
Offshore
According to Knight, the firm is accelerating its offshore focus at both a DFM level and in its International Managed Portfolio Service. This follows the appointment of Darren Zaman as CEO of Brooks Macdonald International, he replaces John Davey who leaves the firm at the end of 2015.
“Advisory services remain an important offering for international clients but we see material opportunities for growth around working with fiduciaries and offshore professional advisers managing discretionary assets,” he added.
The group reported underlying pre-tax profits of £6.7m, up 9% on the comparable six month period in 2013. And, it raised its interim dividend 42% to 10p per share
