Brooks Macdonald Group plc · LSE:BRK
Brooks Macdonald — FY2018 Earnings Presentation
30 slides from Brooks Macdonald's earnings presentation, September 2018
Slide 1: Final results for the 12 months ended 30 June 2018
Final results for the 12 months ended 30 June 2018 Caroline Connellan, Chief Executive Ben Thorpe, Finance Director
Slide 2: Caroline Connellan, Chief Executive
Caroline Connellan Chief Executive
Slide 3: Highlights – market leading flows, crossed £100m revenue threshold
Highlights – market leading flows, crossed £100m revenue threshold Organic net inflows (%) Discretionary FUM (£bn) Revenue1 (£m) +1.6ppts +14% +19% 13.1 12.4 101.6 11.5 10.5 88.8 FY17 FY18 FY17 FY18 FY17 FY18 Underlying2 PBT (£m) Without one-off Underlying2 EPS (p) Total dividend (p) 20.0 investment
Slide 4: Ben Thorpe, Finance Director
Ben Thorpe Finance Director BM BROOKS MACDONALD
Slide 5: FUM continuing to grow rapidly
FUM continuing to grow rapidly FUM £bn 12 10 FUM CAGR 17.3% 8 6 12.4 10.5 4 8.3 7.4 6.6 2 0 Year to June ‘14 Year to June ‘15 Year to June ‘16 Year to June ‘17 Year to June ‘18 Growth 28.2% 13.2% 12.0% 25.9% 18.7% Net new business 14.7% 9.8% 11.6% 11.5% 13.1% Investment 13.5% 3.3% 0.3% 14.5% 5.7% pe
Slide 6: Organic growth reflecting strength of core offering and relationships
Organic growth reflecting strength of core offering and relationships 2018 2017 Investment Investment £m Funds BMI Total Funds BMI Total management management Opening discretionary 7,768 1,159 1,529 10,456 6,158 796 1,348 8,301 FUM Net new 913 355 98 1,365 643 290 17 951 business Performance 507 22
Slide 7: UK IM discretionary revenue growing strongly with improving quality
UK IM discretionary revenue growing strongly with improving quality CAGR FY18 vs FY17 UK IM discretionary revenue (£m) 73.5 13.0% 14.6% 80 64.1 55.4 17.0 1.4% -6.1% 60 50.9 18.1 17.3 40 16.3 56.5 17.8% 22.8% 20 46.0 34.6 38.1 0 FY15 FY16 FY17 FY18 Fees Non-fee Income Proportion of UKIM discretionary
Slide 8: UKIM discretionary revenue yield stabilised in FY18
UKIM discretionary revenue yield stabilised in FY18 UK IM revenue yield components (bps) • Yield down FY18 vs 96.5 95.4 92.1 86.8 100 FY17 but decline mostly in H2 ‘17, 30.9 29.7 26.0 20.1 then levelling off 75 with slight increase 50 in H2 ’18 65.6 65.7 66.1 66.7 25 • H2 increase driven by increase
Slide 9: Summary P&L
Summary P&L % • All figures excluding £m FY18 FY17 Change Braemar Estates; underlying costs and profit figures now include impact of software Funds under management 12,414 10,456 18.7% amortisation Revenue 101.6 88.8 14.4% • Revenue over £100m for the first time Total underlying costs 83.7 71.9 16.4
Slide 10: Reconciliation of underlying profit to statutory profit
Reconciliation of underlying profit to statutory profit £m FY18 FY17 % Change • No further increase to Channel Islands legacy issues provision Underlying profit before tax from continuing following update at 18.0 17.0 6.1% operations1 mid-year Exceptional costs of resolving legacy matters (5.5) (6.5
Slide 11: Underlying segmental results – FY18 vs FY17
Underlying segmental results – FY18 vs FY17 UK Investment Financial Group and FY18 £’m Management Funds Planning International central costs Total Revenue 74.9 7.8 4.6 14.1 - 101.6 Underlying profit before tax 17.8 3.1 0.0 1.4 (4.4) 18.0 Margin 23.7% 40.1% 0.0% 10.2% - 17.7% Annualised yield* 86.8bp
Slide 12: Investment programme – FY18 developments
Investment programme – FY18 developments Successful delivery of additional investment to support future growth and meet regulatory demands • Improvements to risk management and operational framework, announced with last year’s results, have progressed well with spend in line with expectations – £4m
Slide 13: Caroline Connellan, Chief Executive
Caroline Connellan Chief Executive
Slide 14: 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 Our strategy is based on three pillars – foundation, focus and growth Build on a foundation of Focus our business to deliver Seek new opportunities for success increased value growth Track
Slide 15: Delivering our strategy: we have made good progress but more to do
Delivering our strategy: we have made good progress but more to do Delivery over several phases, emphasis across pillars changing over time Maximise returns from upgraded model in BAU Increase value by enhancing what Today • Leverage robust operating we do and how we do it model • Maximise growth op
Slide 16: Our guiding principles underpin our client-centric, can do culture
Our guiding principles underpin our strong client-centric, “can do” culture – now rolling out across our key people processes Final results for the year ended 30 June 2018 16
Slide 17: The fundamental opportunity remains strong
The fundamental opportunity remains strong The adviser opportunity Current… … and expected Underlying market trends positive: 100% 15 75-100% • Increasing numbers of IFAs looking to 37 Currently 5 50-75% outsource investment management, 75% use 47 Increase 18 25-50% supported by regulatory and comme
Slide 18: We are well positioned to benefit in the current environment
We are well positioned to benefit in the current environment • Macroeconomic uncertainty – trade • Likely to drive a flight to quality, favouring long- wars, Brexit – having impact on term investment performance and personalised markets and client sentiment client service • Increasing scrutiny of De
Slide 19: We have delivered in FY18 and remain confident of the future
We have delivered in FY18 and remain confident of the future and our ability to achieve greater value from our growth Confidence in the future Delivered in FY18 • Attractive and growing market opportunity • Strong FUM growth, particularly high net inflows • Positioning of business underpinned by: •
Slide 20: Appendices
Appendices BM BROOKS MACDONALD
Slide 21: Appendices
Appendices • Leadership team • Legacy matters • Cash bridge • EPS and dividend growth • Asset allocation • Investment performance • Industry recognition Final results for the year ended 30 June 2018 21
Slide 22: Leadership team
Leadership team Leadership team now complete, bringing functional capability to complement client focused leadership and investment expertise Caroline Connellan Chief Executive Officer Andrew Shepherd Nick Holmes Richard Spencer Darren Zaman Adrian Keane-Munday Deputy CEO, MD, UK Investment Chief In
Slide 23: Legacy matters
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, and a Dublin-based fund, for which
Slide 24: Cash flow bridge
Cash flow bridge FY18, £m 50.0 1.0 1.3 13.6 40.0 (6.9) 32.2 (5.8) 31.1 (2.4) 30.0 (1.9) 20.0 10.0 - Closing balance Cash generated Issue of new Consideration Fixed, Dividends Tax paid Deferred Closing balance 30 June 2017 from operations shares received intangible and consideration 30 June 2018 and
Slide 25: Underlying and statutory earnings per share and dividend
Underlying and statutory earnings per share and dividend Underlying 120 117.7 100 105.1 80 91.3 87.9 86.2 60 47.0 41.0 35.0 40 26.0 30.5 20 0 2014 2015 2016 2017 2018 Cover: 3.3 3.0 2.5 2.6 2.5 Underlying earnings per share (p) Total dividend (p) Statutory 120 100 80 94.4 60 69.0 68.3 47.0 41.0 35.0
Slide 26: Asset allocation
Asset allocation Current guidance portfolios – September 2018 The investment managers’ tolerance limits: +/- 3% +/- 5% +/- 7% Low Low to Med Medium Med to High High UK FI 28 17 11 3 0 INT FI 17 11 3 2 0 UK Eq 7 14 20 25 29 North American Eq 2 8 12 16 19 Euro Eq 0 3 6 9 10 Japan, FE & Em Eq 0 3 8 14
Slide 27: 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 28: Recent awards
Recent awards 2018 • Citywire Wealth Manager: Regional Stars (The North, Midlands and South East) • PAM: Top 40 Under 40 • PAM: 50 Most Influential • Citywire Wealth Manager: Top 30 Under 30 • Defaqto: 5 star rating for MPS, BPS and MPS platform • Defaqto: Gold Standard for DFM Service 2017 • Profes
Slide 29: Contacts
Contacts Caroline Connellan Ben Thorpe Chief Executive 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 7927 4955 F 020 7499 5718 F 020 7499 5718 E caroline.connellan@brooksmacdonald.com E ben.thorpe@brooksmacdon
Slide 30: 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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