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Brooks Macdonald: Regulatory costs loom but profits boom
by James Phillipps on Sep 11, 2013 at 08:04
Brooks Macdonald saw pre-tax profits rise by 22% over the last year but warned that regulatory pressures will put pressure on margins.
The group’s assets under management grew by 45% to £5.11 billion over the 12 months to the end of June and pre-tax profits surged from £8.52 million to £10.4 million, prompting Brooks to propose a 22% dividend hike to 16p a share.
Revenue rose by 19% to £63.2 million from £53.3 million year-on-year.
However, chief executive Chris Macdonald (pictured) said that regulatory changes, such as the implementation of the retail distribution review (RDR), while a positive for the industry, also continue to represent a significant cost burden on firms.
‘These are changes that we fully support but the costs associated with increased regulation have become and remain substantial,’ he said.
‘Whilst we feel that these costs have peaked in terms of percentage of turnover they have not been passed on to clients. This is something that we and, we believe, the whole of the industry will have to consider over the coming years.’
He added: ‘For the coming year our outlook for investment returns remains cautiously optimistic. We believe that there will be a more stable background for regulatory change, that there will continue to be margin pressures on non-bespoke services and that there will be numerous opportunities for the group. Despite the short term margin pressures we have flagged, we are a progressive business and therefore will continue to invest for the future.’
Looking across the group, some 15% of the rise in discretionary assets under management was attributable to organic growth, while Braemar Estate’s property assets under administration soared by 20% to £1.04 billion and third party assets under administration almost trebled, up from £50 million to £140 million year-on-year.
Discretionary funds under management rose by 45%
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