Brooks Macdonald returns to positive net flows in first half

(Sharecast News) - Brooks Macdonald Group reported a return to positive net flows in the first half on Tuesday, as revenue rose and funds under management and advice increased, with the board lifting its interim dividend and reiterating full-year guidance in line with market expectations. For the six months ended 31 December, total funds under management and advice increased 5% to £20.1bn from £19.1bn at the end of June, comprising £17.8bn of funds under management and £2.3bn of advised-only assets.

The London-listed group recorded net inflows of £2m, compared with net outflows of £262m a year earlier, marking the first half of positive net flows since the second half of 2023.

Revenue rose 12% to £58.2m, supported by higher financial planning and fee income, partly offset by lower interest and transactional income.

Underlying operating expenses, excluding acquisitions and net finance income, increased 3% to £45.4m, while overall underlying costs including acquisitions rose 20% from £37.8m in the prior period.

It said underlying profit before tax fell 12% to £13.6m, with the underlying operating margin narrowing to 23.4% from 29.9%.

Statutory profit before tax declined to £6.2m from £12.6m, reflecting higher organic investment, mergers and acquisitions and integration costs.

Underlying diluted earnings per share decreased 7% to 64.2p, while statutory diluted earnings per share from continuing operations fell 48% to 29.4p.

The board recommended an interim dividend of 31.0p per share, up 3% on the prior year's 30.0p.

"Today's results demonstrate we have good momentum across the business starting with positive net flows and better revenues," said chief executive Andrea Montague.

"We've established Brooks Financial and completed the integration creating a scalable, whole of market financial planning capability.

"We've made deliberate investments in the business to drive sustainable growth and I'm confident our capability in investment management and distribution positions us for the future."

Operationally, the group said it was executing its 'Reignite Growth' strategy, investing in digital capability, artificial intelligence and product innovation, and launching a new mobile app to enhance client experience.

Managed portfolio service assets delivered consistent year-on-year double-digit growth, while bespoke portfolio service assets rose 4%, with around a 50% reduction in net outflows, an 8% increase in high-net-worth client numbers and a 4% increase in advisers using more than one BPS service.

The group also established Brooks Financial, delivering more than £1m in annualised cost synergies and 98% client retention, and secured a Defaqto Gold award for its discretionary fund management service for the fifth consecutive year.

Looking ahead, Brooks Macdonald said it expected first-half revenue trends to continue into the second half and for costs before the FSCS levy to remain broadly in line with the first half.

The group said it currently expected full-year 2026 financial performance to be in line with market expectations and reiterated its medium-term targets of annualised net flows of 5% and business-as-usual cost growth of less than 5%.

At 0944 GMT, shares in Brooks Macdonald Group were down 4.19% at 1,600p.

Reporting by Josh White for Sharecast.com.