Although the firm's discretionary funds under management swelled, its statutory pre-tax profits told a different story.

Brooks Macdonald’s discretionary funds grew over a quarter in the second half of last year, but its pre-tax profits plummeted over 1,000 per cent, the AIM-listed wealth manager said yesterday.

Discretionary funds overseen by the firm jumped 25.8 per cent to £11.7 billion ($16.3 billion) in the six months up to 31/12/2017. 

The group’s underlying pre-tax profits were £8.5 million, up £300,000 year-on-year, but statutory profit before tax was just £600,000, down 1,250 per cent from £8.1 million the previous year. The underlying profit margin dropped 1.3 per cent to 17.4 per cent, and statutory earnings per share were -3.5p, sinking from 48.5p in the previous year. 

“Adjustments from statutory profit are in respect of the amortisation of client relationships; finance income/costs and changes in the fair value of deferred consideration; impairment of the carrying value of goodwill (Levitas); the provision for legacy matters (Spearpoint); disposal costs and the profit from discontinued operations (property management),” Brooks Macdonald’s statement read. 

Caroline Connellan, chief executive, said: “Last July we announced that we are dealing decisively with certain legacy matters, upholding our commitment to protect our clients’ best interests and supporting our relationships with key intermediaries. Today we announced a £5.5m increase in the associated provision. We continue to make all possible efforts to bring the matter to a conclusion.”

Hires
Connellan also announced two new appointments: Priti Verma as group chief risk officer and Adrian Keane-Munday as managaing director of financial planning.