Brooks Macdonald
Ticker: BRK Exchange: AIM

Brooks Macdonald Group plc, through its various subsidiaries, provides leading investment management services in the UK and internationally. The Group, which was founded in 1991 and began trading on AIM in 2005, had discretionary Funds under Management of £17.3 billion as at 31 December 2021.

Tech investments pave way for staff cuts & margin upside

Brooks Macdonald has announced it intends to reduce staff complement by 55, around 10% of its workforce of just over 500. It expects to save £4m of costs per year from the changes, but it will incur restructuring costs of up to £3.0m, to be recognised in the current FY24.

We update our forecasts and valuation as a result of these changes, primarily:

  • Adding ‘one-off’ restructuring charges of £3m to FY24 which reduces statutory profits but not ‘underlying’ profit.
  • Reducing staff costs from FY25 onwards, by around £4m per year.

While these adjustments offset each other to a degree, the increase in outer-year profits is the dominant driver of valuation and we increase our fundamental valuation from 3,000p per share to 3,050p per share (71% above the current share price). We also maintain our view that the ‘de-rating’ of investment/wealth managers, especially Brooks Macdonald, has been overdone, and we refer readers to our 12 October note Well-flagged sluggish quarter, but price fall looks overdone for details.


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