Brooks Macdonald Group plc · LSE:BRK

Brooks Macdonald — H1 FY24 Earnings Presentation

27 slides from Brooks Macdonald's earnings presentation, Mar 7, 2024

  1. Slide 1: Half year results for the six months ended 31 December 2023

    Half year results for the six months ended 31 December 2023 Solid financial performance and continued strategic delivery 7 March 2024 1

  2. Slide 2: Presenters and Agenda

    Presenters and Agenda CEO update Andrew Shepherd, CEO H1 FY24 financial results Andrew Shepherd, CEO Andrea Montague, CFO Update on strategy delivery Andrew Shepherd, CEO Q&A Andrea Monta gue, CF O 2

  3. Slide 3: Continued progress driven by management action

    Continued progress driven by management action Financial highlights Operational highlights £ Solid financial performance, Business reorganisation, headcount reduction of 18% growth in underlying PBT of c.10% to deliver annualised £4m of cost saving, with £17.1 million with strong benefits to be real

  4. Slide 4: Presenters and Agenda

    Presenters and Agenda CEO update Andrew Shepherd, CEO H1 FY24 financial results Andrew Shepherd, CEO Andrea Montague, CFO Update on strategy delivery Andrew Shepherd, CEO Q&A Andrea Monta gue, CF O 4

  5. Slide 5: Solid financial performance

    Solid financial performance FUM (£bn) Total Revenue (£m) Underlying PBT (£m) +8% +8% +8% +18% 16.2 17.6 63.6 17.1 58.9 14.5 H1 FY23 H1 FY24 H1 FY23 H1 FY24 H1 FY23 H1 FY24 Underlying Diluted EPS (p) Dividend per Share (p) Underlying PBT Margin (%) +11% +4% +2.3ppts 72.5 80.4 28.0 29.0 24.6% 26.9% H1

  6. Slide 6: Continued growth in FUM to record level

    Continued growth in FUM to record level Group total FUM movement H1 FY23 H1 FY24 Opening FUM 15,667 16,847 Gross inflows holding strong Gross inflows 1,162 1,173 despite challenging Net flows 347 (168) macroeconomic backdrop Investment Performance 212 900 Continued strong growth in Closing FUM 16,22

  7. Slide 7: Strong underlying profit margin of 26.9%

    Strong underlying profit margin of 26.9% Record closing FUM up 8.3%, reflecting consistent investment performance Summary financial performance Revenue up 8.0% driven by H1 FY23 H1 FY24 Change higher financial planning fees, £m £m transaction and interest income Closing FUM 16,226 17,579 +8.3% Under

  8. Slide 8: Change in business mix driving reduction in yield

    Change in business mix driving reduction in yield -1.4bps Average FUM (%) and yields (bps) International Total yield bridge between H1 FY23 and H1 FY24 (bps) Funds -1.2bps Platform MPS Fee only Total yield change Fee only yields Custody MPS 70.3bps 69.1bps yields H1 FY23 BPS H1 FY24 72.6bps 14% 13%

  9. Slide 9: Underlying costs (excluding acquisitions) up 1.6%

    Financial results Underlying costs (excluding acquisitions) up 1.6% H1 FY23 H1 FY24 Inc / (dec) Total underlying costs movement £m £m £m % H1 FY23 to H1 FY24 (£m) Fixed staff costs 21.3 22.0 0.7 3.3 +£0.7m Variable staff costs 4.3 5.4 1.1 25.6 Acquired staff costs 0.2 1.5 1.3 >100.0 Total staff cost

  10. Slide 10: Strong capital position supporting progressive dividend policy and future growth opportunities

    Strong capital position supporting progressive dividend policy and future growth opportunities Own Funds breakdown (£m) 68.9 57.0 Capital position 10.6 35.6 4.4 • Regulatory resources of £68.9m with a 4.6 robust capital surplus £35.6m, increasing 42.0 as a result of our improved modelling in 28.7 ou

  11. Slide 11: Presenters and Agenda

    Presenters and Agenda CEO update Andrew Shepherd, CEO H1 FY24 financial results Andrew Shepherd, CEO Andrea Montague, CFO Update on strategy delivery Andrew Shepherd, CEO Q&A Andrea Monta gue, CF O 11

  12. Slide 12: We meet client needs throughout an investor lifecycle

    Accumulators – Early career Client/adviser need BM proposition We meet client needs throughout an investor lifecycle • Primary focus on building wealth MPS • Adviser preference for specific Platform MPS third-party platform • ESG preferences Responsible Investment Service MPS Preparers – Mid-career

  13. Slide 13: Market-leading organic growth: distinct distribution channels

    Market-leading organic growth Distinct distribution channels Positioned for growth Targeted approach offering breadth of proposition Dedicated focus to our distinct distribution channels with different propositions, target audiences and business models Intermediated Direct Leveraging strong distribu

  14. Slide 14: Service and operational excellence

    Service and operational excellence Technology Operating efficiencies improving our service to benefit margin • Client relationship management • Set for success • First phase of Salesforce CRM implemented, focused • Organisational changes completed – annual cost on advisers reduction of c.£4 million

  15. Slide 15: Agile, disciplined and high-quality M&A

    Agile, disciplined and high-quality M&A Our medium-term ambition is to be a Top 5 wealth manager in the UK Acquisition • Scale matters in our sector, both in operating criteria leverage and the ability to deliver a comprehensive investment proposition • High quality business • We have the investment

  16. Slide 16: A solid half-year with further strategic progress

    Moving forward with ambition A solid half-year with further strategic progress Robust gross flows reflecting Robust underlying strength of proposition profit margin H1 FY24 Increased the interim Maintained discipline on dividend again acquisition criteria Confident in our strategy, well positioned t

  17. Slide 17: FY24 Guidance

    FY24 Guidance Gross inflows remain strong Product mix trends • Ongoing product mix change expected to • Demand for our products and continue to impact revenue yields services remains strong, reflected in continued gross inflows Interest turn Net outflows expected for FY24 • Interest turn in H2, net

  18. Slide 18: Presenters and Agenda

    Presenters and Agenda CEO update Andrew Shepherd, CEO H1 FY24 financial results Andrea Montague, CFO Andrew Shepherd, CEO Update on strategy delivery Andrew Shepherd, CEO Q&A Andrea Monta gue, CF O 18

  19. Slide 19: Appendices

    Appendices BM BROOKS MACDONALD

  20. Slide 20: Gross inflows relatively in line with prior years, elevated outflows driving net outflows position

    Gross inflows relatively in line with prior years, elevated outflows driving net outflows position Annualised gross and net flows by half year (%) 19.3 15.5 14.6 15.2 14.8 13.9 11.3 12.0 11.3 5.3 5.8 4.0 4.4 1.2 (2.0) (4.1) (5.4) (7.7) (10.6) (9.9) (10.4) (14.3) (13.5) (16.1) (16.7) (15.9) (19.0) H1

  21. Slide 21: Record closing FUM, growth in MPS platform driven by broad network of firms

    Record closing FUM, growth in MPS platform driven by broad network of firms H1 FY24 Organic net flows Closing (£m / annualised Opening FUM 21% of BPS gross FUM Q1 Q2 Total H1 Inv. Perf. New Gilts offering % growth) (£m/%) (£m/%) (£m/%) (£m) (£m) inflows generated in (£m) growing to almost £0.2 our s

  22. Slide 22: Overall yield marginally down on prior period mainly driven by change in mix

    Notes on yields movement Overall yield marginally down on prior period mainly UKIM driven by change in mix • BPS fee yield down by 1.5bps driven by underlying product mix and rates achieved on new business Revenue Yields Avg FUM • BPS non-fee yield (transactional & FX) up by 3.1bps in H1 FY23 H1 FY2

  23. Slide 23: Statutory result impacted by goodwill impairment charge

    Statutory result impacted by goodwill impairment charge H1 FY23 H1 FY24 Goodwill impairment (£11.6m) £m £m • Impairment charge recognised in relation to the International business, where the estimated recoverable amount is less than the Underlying profit before tax 14.5 17.1 carrying value of the go

  24. Slide 24: UKIM & International performance impacted by weaker markets

    UKIM & International performance impacted by weaker markets UK Investment H1 FY24 (£m) International Group Total Management Revenue 54.2 9.4 - 63.6 UKIM Direct costs (23.3) (6.4) (18.3) (48.0) UKIM reported an 11.1% increase in revenue Contribution 30.9 3.0 (18.3) 15.6 driven by higher financial pla

  25. Slide 25: Strong cash generation supporting dividend growth and building capacity for bolt-on M&A opportunities

    Strong cash generation supporting dividend growth and building capacity for bolt-on M&A opportunities £m 26

  26. Slide 26: Capital expenditure

    Capital expenditure 7.0 0.9 1.0 4.9 0.6 3.7 3.7 0.2 3.2 0.2 1.7 0.4 0.5 £m 0.1 5.1 0.2 2.3 1.7 0.4 0.2 3.1 2.9 3.0 0.4 2.6 1.9 0.7 1.1 0.1 0.6 FY18 FY19 FY20 FY21 FY22 FY23 H1 FY23 H1 FY24 Infrastructure & Technology Property Related IT Equipment 27

  27. Slide 27: Robust investment performance

    Robust investment performance Cumulative performance (%) 1 year to 3 years to 5 years to 10 years to 31.12.23 31.12.23 31.12.23 31.12.23 BM Low Risk 6.10 0.48 12.67 30.13 Low Risk ARC Sterling Cautious PCI 4.43 0.57 13.23 26.66 Relative performance 1.67 -0.10 -0.56 3.47 BM Low-to-Medium Risk 6.84 3.

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