Underlying pre-tax profit for Brooks Macdonald increased by 17.9% from £14.5m to £17.1m during the second half of 2023, according to its half-yearly results published today (7 March 2024).
Underlying profit margins ticked up from 24.6% during the first half of last year, to 26.9%, while total revenue for the group increased by 8% from £58.9m to £63.6m. Brooks said this was the result of higher interest income, acquisitions the group had previously made and financial planning revenue.
Funds under management increased by 4.3% from £16.2bn to £17.6bn, despite net outflows of £200m over the six months to the end of December 2023. This was due to client demand and gross inflows of £1.2bn – a 1% uptick year on year – with the company’s model portfolio service attracting half of these inflows.
Brooks Macdonald’s platform MPS grew by 12.6% over the six months to £3.9bn, with 7.7% of overall growth the result of “organic net inflows”.
The average performance of investments during H2 last year stood at 5.3%, just fractionally below the MSCI Private Investor Balanced index, which attributed £900m to FUM.
Cost-cutting
In October last year, Brooks Macdonald announced that it would cut 55 job roles across the business in order to save costs, thereby reducing the business’s headcount by 10%. This is still forecast to create an annual cost saving of £4m
Elsewhere, however, Brooks Macdonald International is “behind plan” so a strategic review is being implemented on this arm of the business. Brooks has “recognised an £11.6m one-off, non-cash impairment charge on the goodwill associated with the International business”, which was acquired in 2012. This accounted for an £800,000 pre-tax loss at a group level, although the firm points out the impairment charge “does not impact cash nor regulatory capital, and has not limited the group’s ability to distribute cash to shareholders”.
Andrew Shepherd, CEO of Brooks Macdonald, said “demand for [the company’s] products and services remains strong across our group”.
“During the last six months our priority has been to help our clients and advisers navigate the challenging markets that the wealth management industry has continued to face. The need for trusted advice and robust long-term investment management remains as strong as ever,” he said.
“As a management team, we have been proactive in adapting our business to the current environment, resulting in a group that is in a stronger operational position, well-placed to take advantage of the opportunity ahead.
“These results are a testament to the expertise and hard work of our people and our collective drive to deliver long-term sustainable results. Although the short-term macroeconomic outlook remains uncertain, we have confidence in our growth strategy and our ability to keep delivering for all our stakeholders.”
