UK investment management giant Brewin Dolphin’s full-year pre-tax profits fell by 70% after it suffered heavy exceptional costs from cancelling a troubled new software system.
The figure dropped from £28.4 million to £8.6m and was the result of Brewin’s “decision to terminate the planned roll-out of the new operating system”.
The Figaro system experienced delays in design, configuration and testing, and problems cropped up with the functionality of the software.
Figaro was successfully implemented across Brewin’s execution-only platform Stocktrade, but the group concluded it would not be an appropriate operating system for its discretionary wealth management division.
The termination of the roll-out resulted in an impairment charge of £31.7m and £2m for the final settlement of contractual obligations
The wealth manager, which has 30 offices throughout the UK including in Dundee, Aberdeen, Edinburgh and Glasgow also suffered other exceptional costs, including £2.3m for redundancy payments following the closure of seven Brewin offices.
Additional provision of £2 million was made for surplus property resulting from these branch closures, and failure to achieve an anticipated exit from existing surplus space, primarily in Edinburgh.
Despite these setbacks, the group’s fee income rose by 17% to £177.3m, helped by a 13% increase in discretionary assets to £24 billion.
Discretionary funds accounted for 82% of the total £36.8bn that the firm runs, ahead of Brewin’s 80% target.
Excluding the costs associated with the technology writedown and office closures, adjusted pre-tax profit was up 16% at £60.2m. The adjusted pre-tax margin increased to 20.7% from 18.4% and is on track to achieve the 25% margin target by 2016.
Total income of £290.5m was up 2% and the final dividend increased by 24% to 6.25p, while the full-year dividend rose 15% to 9.9p.
Fee income now represents 67% of core income, up from 62% in 2013. Income from advisory services declined 9% to £31.6m because of a 23% outflow from these services during the year.
Brewin’s share price was up 3.73%, trading at 289.20p.