Results being rushed out before investors go on holiday in August? No, it just feels like it with three in three days, followed by two trading updates, the latter two arriving while this note was being written.
Beazley started off the Lloyds results season with another good performance, but with a warning about a continued decline in premium rates. It must be noted that the increase in profits is wholly due to a better investment performance and that Beazley’s underwriting profits were about 4% lower – still a remarkably good performance since a 2% fall in premiums should, ceteris paribus, reduce underwriting profits by 20%.
WHIreland reported an impressive turnaround into profit in H1 2016/8, despite some further one-off costs, this time partially offset by a one-off profit on the sale of its old Head Office. The share price, which had risen over 10% on its trading update last month, rose again, more modestly, in response. Please see our separate note for more details.
It is becoming predictable that Rathbone’s interim results will be good. FUM rose 7% to £36.6bn mainly thanks to organic growth supported by positive investment performance and a small amount of “purchased growth”. We consider that RUTM will continue to be highly profitable as investors are generally happy to pay for good performance, which RUTM continue to provide (their three larger funds with £3.2bn of assets are all first quartile for YTD, 3 years and 5 years, the smaller ones with £0.2bn are second quartile over 5 years).
Brewin Dolphin produced a pleasing performance in its Q3 with income up 8.4% vs Q3 of 2015/6, only a little of which came from the Duncan Lawrie acquisition that completed in May. AUM growth outperformed the WMA index significantly, even excluding the acquired funds, thanks to net flows of £0.3bn into its Managed Portfolio Service for mass affluent investors, a 67% rise, and a similar amount in funds directed to its discretionary service by intermediaries abetted by a modest but useful investment outperformance.
Charles Stanley also outperformed the index in growing AUMA – in their case thanks to a net inflow of funds from existing clients – by 0.4% to £24.1bn. Revenue growth was more impressive to £38m for the quarter, a 13% increase from their Q1 of 2016/7. The latter suggesting that we may see an overdue improvement in profit margins in the current year.
Brooks MacDonald also achieved a strong performance with Discretionary FUM rising 5.3% in the quarter to pass the £10bn milestone, through a combination of net inflows of £0.3bn and positive investment performance of £0.2bn, the latter being noteworthy in the context of a declining index. For the year to end-June FUM grew an impressive 26%.