Brooks Macdonald Group Plc · LSE:BRK
Brooks Macdonald — H1 FY2018 Earnings Presentation
28 slides from Brooks Macdonald's earnings presentation, March 2018
Slide 1: Half year results for the six months ended 31 December 2017
Half year results for the six months ended 31 December 2017 Caroline Connellan, Group Chief Executive; and Simon Jackson, Group Finance Director
Slide 2: Caroline Connellan, Chief Executive
Caroline Connellan Chief Executive
Slide 3: Highlights – strong underlying business performance continues
Highlights – strong underlying business performance continues Organic net inflows (£m) Discretionary FUM (£bn) Revenue1 (£m) +11% +143% +26% 48.8 808 11.7 44.0 9.3 332 H1 FY17 H1 FY18 H1 FY17 H1 FY18 H1 FY17 H1 FY18 Underlying2 PBT (£m) Without one-off Underlying2 EPS (p) Interim dividend (p) 9.6 in
Slide 4: Update on provision to deal with legacy matters
Update on provision to deal with legacy matters • £6.5m provision announced July 2017 to deal proactively with certain legacy matters arising from former Spearpoint business (acquired 2012) relating to some discretionary portfolios formerly managed by Spearpoint, now managed by our Jersey office, an
Slide 5: Simon Jackson, Finance Director
Simon Jackson Finance Director
Slide 6: Summary P&L
Summary P&L % • All figures excluding £m, continuing operations H118 H117 Change Braemar Estates • Without the impact of the Funds under management 11,738 9,330 25.8% one-off risk programme, cost growth would be lower than Revenue 48.8 44.0 10.9% revenue growth at 9.6% Total underlying costs 40.3 35
Slide 7: Reconciliation of underlying profits to statutory
Reconciliation of underlying profits to statutory £000 H118 H117 % Change • Throughout the Underlying profit before tax, continuing presentation, references to 8,500 8,236 +3% underlying measures (profit, operations eps, etc.) relate to continuing Amortisation of intangible assets (1,196) (1,250) -4
Slide 8: Growth in discretionary FuM
Growth in discretionary FuM 6 months to Dec 2017 6 months to Dec 2016 Intern- Intern- £m UKIM Funds Total UKIM Funds Total ational ational Opening discretionary 7,764 1,163 1,529 10,456 6,158 796 1,348 8,301 FUM Net new 519 205 83 808 216 76 40 332 business Performance 402 16 55 474 537 59 100 697 C
Slide 9: Underlying segmental results – H1 FY18 vs H1 FY17
Underlying segmental results – H1 FY18 vs H1 FY17 UK Investment Financial Group and H1 ‘18 £’000 management Funds planning International central costs Total Revenue 35,934 3,675 2,466 6,720 - 48,795 Underlying profit before tax 9,437 710 292 539 (2,478) 8,500 Margin 26.3% 19.3% 11.8% 8.0% - 17.4% An
Slide 10: Cash bridge £'000
Cash bridge £’000 35,000 32,183 1,388 2,873 30,000 3,524 2,988 26,909 1,852 966 25,000 409 20,000 15,000 10,000 5,000 - Opening Tax paid Fixed, Dividends Deferred Issue of new Proceeds from Cash Closing balance 30 intangible and consideration shares sale of generated balance 31 June financial paymen
Slide 11: Investment programme
Investment programme Continued investment to meet regulatory requirements and to support next phase of growth • IT investment continuing in overall platform given growth, increased client and adviser expectations, and to deliver efficiency Implications – e.g., online application portal, continuing e
Slide 12: Caroline Connellan, Chief Executive
Caroline Connellan Chief Executive
Slide 13: Particularly high net organic growth in H1 FY18
Particularly high net organic growth in H1 FY18, reflecting strength of core offering and relationships Net organic growth by half year FY13 to H1 FY18 FY15 FY16 FY17 H1 FY18 9.8% 11.6% 11.5% 7.7% 900 9.0% 800 8.0% 700 7.0% 600 6.0% 500 5.0% 400 4.0% 300 3.0% 200 2.0% 100 1.0% 0 0.0% H1 '15 H2 '15 H
Slide 14: Consistent outperformance of ARC private client benchmark
Consistent outperformance of ARC private client benchmark underlining value of our Centralised Investment Proposition Increment by which Brooks Macdonald risk profiles’ cumulative performance exceeds relevant ARC PCI (percentage points) 5.83 Low 2.5 0.91 Low-to- Medium 1.23 1.55 3.80 Medium 1.47 1.2
Slide 15: Shifting shape of UK IM discretionary revenue
Shifting shape of UK IM discretionary revenue • Higher quality earnings as shift from transaction income to flat fees continues • Yield decline levelling off in H1 FY18 • Lower dealing volumes resulting from low volatility in the markets UK IM discretionary revenue (£m) Revenue yield, bps CAGR 97.9
Slide 16: Significant market opportunity
Significant market opportunity Market opportunity remains Responding to external trends • Technology and “digital” playing increasingly • Increasing wealth: important role – Wealth forecast to continue to rise – Essential part of client experience and – Advice requirements growing satisfaction level
Slide 17: Well positioned to build on our success to date and deliver future growth
Well positioned to build on our success to date and deliver future growth while progressively improving margins Focus on our core businesses of UK IM (including Funds), International and Financial Planning Build on a foundation of Focus our business to deliver Seek new opportunities for success incr
Slide 18: Leadership team
Leadership team Investing in our leadership team, building functional capability to complement client focused leadership and investment expertise Caroline Connellan Chief Executive Officer Andrew Shepherd Nick Holmes Richard Spencer [Adrian Keane- Darren Zaman Deputy CEO, MD, UK Investment Chief Inv
Slide 19: Following a strong first half, we remain confident in our prospects
Following a strong first half of the year, we remain confident in our prospects for the full year • Significant opportunity available to us, with underlying trends including increased savings and advice needs, pensions freedoms and adviser outsourcing • Maintained momentum in FUM, delivering particu
Slide 20: Appendices
Appendices BM BROOKS MACDONALD
Slide 21: Appendices
Appendices • Funds under management • EPS and dividend growth • Asset allocation • Investment performance • Industry recognition Half year results for the six months ended 31 December 2017 21
Slide 22: FUM continuing to grow rapidly
FUM continuing to grow rapidly 12 10 8 6 4 2 0 Year to Year to Year to Year to Year to Year to Half year June ‘12 June ‘13 June ‘14 June ‘15 June ‘16 June ‘17 to Dec ’17 Total BM FUM (£m) 3,520 5,110 6,550 7,413 8,301 10,456 11,738 % Increment 18.6 45.0 28.2 13.2 12.0 25.9 12.3 % MSCI WMA Private (1
Slide 23: Underlying earnings per share, dividend growth and cover
Underlying earnings per share, dividend growth and cover 120 115.8 4 3.5 3.5 3.5 100 3.3 Underlying earnings per share (p) 3.2 91.3 87.9 3.0 87.9 3 Total dividend (p) 86.2 2.8 80 Interim dividend (p) Underlying dividend cover (multiple) 2.5 2.5 62.8 60 2 55.1 48.0 41.2 41.0 1.5 35.0 40 30.5 26.0 22.
Slide 24: Asset allocation
Asset allocation Current guidance portfolios – March 2018 The investment managers’ tolerance limits: +/- 3% +/- 5% +/- 7% Low Growth, Low Income Income & Low to Med Medium Med to High High Growth UK FI 26 25 17 11 3 0 INT FI 20 17 11 3 2 0 UK Eq 7 7 14 20 25 29 North American Eq 2 2 8 12 16 19 Euro
Slide 25: Our performance vs. ARC's Private Client Index
Our performance vs. ARC’s Private Client Index • Over the last five years, BM has generally achieved strong relative performance compared to the ARC PCI. Please note that due to rounding, the figures shown in this table may not precisely add up to the totals / differentials shown. Past performance i
Slide 26: Recent awards
Recent awards 2018 • PAM: 50 Most Influential • Citywire Wealth Manager: Regional Stars (Midlands, South East and North) 2017 • City of London Wealth Management: Wealth Manager of the Year • Citywire: Top 30 Under 30 • Citywire Wealth Manager: Regional Stars (Midlands and South East) • Defaqto: 5 st
Slide 27: Contacts
Contacts Caroline Connellan Simon Jackson Group Chief Executive Group Finance Director 72 Welbeck Street 72 Welbeck Street London London W1G 0AY W1G 0AY T 020 7499 6424 T 020 7499 6424 D 020 7408 5577 D 020 7408 5541 F 020 7499 5718 F 020 7499 5718 E [email protected] E simon.ja
Slide 28: Important information
Important information This presentation has been prepared for general information on matters of interest only and does not constitute an invitation to treat or a promotion, solicitation, or offer capable of acceptance and does not constitute professional advice of any kind. You should not act upon t
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