Brooks MacDonald sheds property management business as profits plummet

Edinburgh wealth manager Brooks MacDonald has reported a near halving of its pre-tax profits as it announced today that it has sold its property management business to bolster its balance sheet.

While Brooks’ end of year results show a 26 per cent growth in funds under management, the firm said statutory pre-tax profits had fallen from £15.9 million to £8 million in the year to the end of June, a fall of 49.3 per cent.

At the same time costs increased, which the company attributed to investment in IT and compliance, and in dealing with “legacy matters” at a cost of £6.5 million from its ownership of the Spearpoint business.

Statutory earnings per share dropped to 43p, from the previous 94p.

The dividend increased to 41p, from the previous year’s 35p.

Discretionary funds under management rose to £10.5 billion from the previous £8.3 billion.

The fund management business now has assets of £1.2 billion, an increase of 46 per cent, with the Defensive Capital Fund now having assets of £425 million.

The company’s underlying profit margin for the year was 20.1 per cent, up from the previous year’’s 19.1 per cent.

The firm also said that it has sold property management company Braemar Estates to Rendall and Rittner for £1.9 million.

Chief executive Caroline Connellan, said the disposal of this business is to allow the company to focus on its core business and help margins to improve in the coming years.

The company said Braemer accounted for 1.4 per cent of profit but had a net of liabilities over assets of £500,000.

Ms Connellan said: “I am encouraged by the strong underlying results we are reporting for the year, with FUM reaching £10.5bn and underlying profitability up by 19 per cent, reflecting the strength of our core offering and relationships.

“We are making progress on the initiatives I outlined in July, to invest in our risk and operational framework and to proactively deal with certain legacy matters. In addition, to support the focus on our core business and our drive to improve margins, today we have announced the sale of Braemar Estates, our property management business.

“As we look to the future and build on our success to date, my focus is on positioning the business to capture the significant growth opportunities open to us. We will continue to enhance the services we offer and improve business efficiency while responding to the rapidly changing competitive and regulatory environment, and the increasing influence of technology.

“I am confident that these actions will result in a much stronger platform to deliver sustainable long-term growth, upholding our commitment to protect our clients’ best interests and supporting our relationships with key intermediaries.

“We have started our new financial year with positive momentum and look forward with confidence, notwithstanding our relative caution around markets and client sentiment.”