AIM star with more growth to come £200m market cap financial services firm Brooks Macdonald is one of the most successful companies on AIM.
The Group comprises six companies: a wealth management operation (Brooks Macdonald Asset Management), a discretionary asset management business, a fund management business, a financial advisory and employee benefits operation, a retirement planning services provider and a specialist property management company. The Group also runs an investment management and stock broking business in the Channel Islands. Brooks Macdonald has grown fast. The assembled collection of related operations has taken the company to AIM’s top table.
wins many of its mandates through a network of around 100 professional intermediaries For the year 2005, Brooks Macdonald paid shareholders a 1p dividend. The shares at the time traded around 150p. The dividend has been increased year-on-year since then, reaching a total of 26p for 2014. Earnings have followed a similar trajectory: from £0.6m of pre-tax profits for 2005 to £13.3m in 2014. As you would expect, growth is also reflected in Brooks’ funds under management figures. Five years ago, the Group had £1.4bn of funds under management. Brooks added a further 8
£1.4bn in 2014 alone, £1bn of which was added through organic growth. 2014 results, released in the middle of September, revealed a slowing in growth at the company. Although revenues were 9% higher, pre-tax profit showed an increase of just 2%. However, there was still some considerable cheer for shareholders in the dividend as it was raised 15% for the full year.
forecast to report 96.3p of earnings per share for 2015 Funds under management at the end of June 2014 hit £6.5bn. Brooks Macdonald has been a major beneficiary of consumers’ move toward managing their own pension. 40% of funds under management at Brooks Macdonald are the pension savings of private individuals. The company wins many of its mandates through a network of around 100 professional intermediaries. Brooks Macdonald hopes, in time, to double this to 200. Changes in the recent budget are expected to have a minimal effect on the business in the short term but a make a more meaningful difference in time. According to Stockopedia, Brooks Macdonald is forecast to report 96.3p of earnings per share for 2015 and
another double-digit dividend rise to 29.3p. Brokers put 2016 EPS at around 120p, with the expectation that dividends could hit 35p.
market usually forces investors to pay a premium for quality Despite dropping back from around 1700p six months ago, Brooks Macdonald shares are not cheap. That should not come as a surprise, as the market usually forces investors to pay a premium for quality. AIM has a great record of rewarding investors in successful smallcap companies either through share price and dividend progression or a takeover. Brooks Macdonald shares are an opportunity to back a successful, enterprising management team that has made dividends a priority. Brooks Macdonald Group (LON:BRK) FOR High quality company Growth forecast to pick up again AGAINST High valuation given last year's growth Regulatory changes always possible Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high
£191m 1,400p:1,420p 17.3 1.8% 1301p:1817p
Published on Oct 5, 2014