Brewin Dolphin disappoints

Private investors hoping to get a share of the spoils enjoyed by the people who advise them will have been disappointed by the performance of Brewin Dolphin to date. One of the largest private client stockbrokers in the UK, shares in the group have barely peeped above the 150p at which they were placed last June.

This underperformance at a time when the stock market has been booming is partly a reflection of the group's own poor results. A "quiet" first quarter for the market last year cut half-way profits by just over a fifth. Full-year profits out yesterday show Brewin has only made up the shortfall in the full year by dint of acquisitions.

Pre-tax profits rose marginally to pounds 4.21m from pounds 4.03m and even that small increase was only possible through the addition of new offices, which added pounds 540,000 to these figures. Like-for-like operating profits fell from pounds 3.35m to pounds 2.79m.

The group's confidence is reflected in the 17 per cent increase in the dividend to 7p and, to be fair, Brewin is expanding rapidly. It has developed a reputation as a poacher, with teams defecting from rivals Quilter Goodison in Jersey and Allied Provincial's Birmingham office and, more litigiously, its Glasgow branch since June. The main contributors to the results were new offices purchased in Lymington, on the south coast, and at Marlborough.

The head count has risen from around 420 to over 500 in the space of a year, while funds under management are up 24 per cent to pounds 6.2bn. Within that, discretionary funds have grown a third to pounds 1.2bn and a further pounds 100m will come aboard with the imminent purchase of James Finlay Investment Management in Glasgow.

All this has proved a drag on profits, but house brokers Panmure Gordon believe Brewin is capable of pounds 5.3m in the current year, putting the shares, up 4p at 155p, on a forward rating of 9. Not expensive and the group's 40,000 clients are a valuable asset, but the controlling stake held by staff and associates means the market is thin.

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