Brooks Macdonald Group plc · LSE:BRK
Brooks Macdonald — H1 FY2017 Earnings Presentation
31 slides from Brooks Macdonald's earnings presentation, February 2017
Slide 1: Half year results for the six months ended 31 December 2016
Half year results for the six months ended 31 December 2016 Chris Macdonald, Group Chief Executive; Simon Jackson, Group Finance Director; and Andrew Shepherd, Group Deputy Chief Executive
Slide 2: Highlights: Financial
Highlights Financial Total discretionary FUM up to £9.3bn Revenue up 17%* Underlying pre-tax profit up 24% to £8.9m* Underlying EPS UP to 51.83p* Pre-tax profit up 49% to £8.16m* EPS up 50%* Interim dividend up 25% to 15p Cash & liquid investments of £21.6m “A strong first half for the Group in spit
Slide 3: Highlights: Business
Highlights Business 12.4% organic growth in FUM - BMIM, BMI and BMF all grew FUM Continued investment in infrastructure Significant growth in distribution Continued traction in all our core service lines - BPS, MPS and Multi Asset Funds Renewed focus on Bespoke Portfolio Service Pensions continue to
Slide 4: Asset growth across the Group
Asset growth across the Group Discretionary funds under management Dec 2016 June 2016 Dec 2015 BMIM £6.91bn £6.15bn £5.83bn BMI £1.49bn £1.35bn £1.25bn BMF £930m £796m £739m Total £9.33bn £8.30bn £7.82bn Other assets and funds Dec 2016 June 2016 Dec 2015 Property AUA £1.21bn £1.10bn £1.13bn Third pa
Slide 5: Discretionary funds under management for last 5 years
Discretionary funds under management (£m) for last 5 years 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Dec-16 Year to Year to Year to Year to Year to Half year June ‘12 June ‘13 June ‘14 June ‘15 June ‘16 to Dec ‘16 Total BM FUM (£m) 3,520 5,110 6,550 7,413 8,30
Slide 6: Analysis of discretionary fund flows H117
Analysis of discretionary fund flows H117 6 months to Year to 6 months to £m Dec 2016 June 2016 Dec 2015 Opening discretionary 8,301 7,413 7,413 FUM Net new discretionary 332 863 394 business Acquisitions 0 0 0 Investment growth 697 25 15 Total FUM growth 1,029 888 409 Closing FUM 9,330 8,301 7,822
Slide 7: Continued growth in distribution
Continued growth in distribution June June June June Dec June Dec 2012 2013 2014 2015 2015 2016 2016 Number of 420 544 670 775 900 960 1,020 introducing firms Number of strategic 11 12 15 17 17 18 20 alliances Investment managers 67 90 107 102 102 101 97 and trainees Total staff numbers 282 376 457
Slide 8: Financial highlights
Financial highlights H117 H116 % Change Revenue £45.34m £38.70m +17% Underlying profit before taxation £8.87m £7.13m +24% Profit before taxation £8.16m £5.48m +49% Underlying earnings per share 51.83p 42.59p +22% Basic earnings per share 48.61p 32.44p +50% Interim dividend 15.0p 12.0p +25% Cash at b
Slide 9: Underlying profit before tax
Underlying profit before tax £’000s H117 H116 % Change Investment Management fee income 37,898 31,678 +20% Fees from other advisory services and 6,533 5,590 +17% other income Commission income (5) 57 Pre RDR payments to introducers 910 1,373 Underlying operating income 45,336 38,698 +17% Underlying
Slide 10: Reconciliation of underlying profits to statutory
Reconciliation of underlying profits to statutory £m H117 H116 % Change Underlying profit before tax 8.87 7.13 +24% Amortisation of intangible assets (1.87) (1.36) Finance costs of deferred consideration (0.16) (0.29) Changes in fair value of deferred consideration 1.32 - Acquisition related costs -
Slide 11: Underlying segmental results
Underlying segmental results Funds and Investment Financial property Group and H117 £’000 management planning management International central costs† Total Revenue 32,789 2,267 3,754 6,526 - 45.336 Underlying profit before tax 10,899 180 7 628 (2,843) 8,871 Margin 33.2% 7.9% 0.2% 9.6% - 19.6% Annual
Slide 12: Operating expenses
Operating expenses £’000 H117 H116 % Change Fixed staff costs 13,789 13,174 4.7% Variable staff costs 10,418 7,931 31.4% Average number of employees in period 486 480 1.3% Actual number of employees at period end 489 474 3.2% Other direct expenses 12,206 9,821 24.3% Underlying operating expenses 36,
Slide 13: Total administrative costs
Total administrative costs H117 H116 Staff costs - payroll (fixed) 6% 6% Staff costs - other (variable) 2% 7% 7% 5% Commission & fees 36% 9% Investment administration 41% 9% £38.3m Sales & marketing 3% £32.3m 2% 3% ICT 3% 6% 4% Property & office Professional, regulatory & 27% financial 24% Depreciat
Slide 14: IT investment
IT investment • Investment into a new investment management software system to be used across both offshore and onshore parts of the business • The system replaces two non-compatible systems in the Channel Islands and will upgrade the existing system currently used onshore • The project completion d
Slide 15: IT investment - Benefits
IT investment - Benefits • On completion the system will provide: – A new client portal for improved client access – A new client relationship management system – Increased capacity in both the front and back office environments – Increased automation and integration of processes reducing operationa
Slide 16: Cash bridge
Cash bridge £’000 22,500 £7,830 £20,538 £19,478 £1,469 20,000 £1,383 17,500 £3,101 15,000 £1,580 £1,213 12,500 £541 £91 10,000 7,500 5,000 2,500 0 -2,500 Opening Tax paid Fixed, Dividends Deferred Purchase of Issue of new Proceeds of Cash Closing balance 30 intangible and consideration shares for sh
Slide 17: Strategies for growth
Strategies for growth • To be the investment manager of choice for professional intermediaries and private clients on and offshore • Focus on consistently strong service, performance and stability • Regional growth remains strong – First regional office through £1bn in Hampshire – Intention to open
Slide 18: Industry background, our positioning and the key drivers for FY17 growth
Industry background, our positioning and the key drivers for FY17 growth Industry Background Our Positioning Key Growth Drivers Taking advantage of growth in professional adviser community, building strong long term Continuing consolidation and relationships with independent Tax efficient savings ve
Slide 19: Group summary
Group summary Overview Organic growth Discretionary wealth management Double digit net organic growth FUM of £9.3bn Driven by: Future Opportunities - focus on intermediary channels 20 strategic alliances & >1,000 - sweet spots of SIPP, ISA, multi asset Professional Advisers Wider & deeper with Profe
Slide 20: Outlook & conclusions
Outlook & conclusions • Strong organic growth despite difficult and volatile market conditions • Distribution base continues to grow in an expanding sector • Integration of Asset Management and Funds and working closer with Brooks Macdonald International (BMI) leading to further distribution opportu
Slide 21: Appendices
Appendices BM BROOKS MACDONALD
Slide 22: Appendices
Appendices • Analysis of the balance sheet • EPS and dividend growth • Asset allocation • Analysis of discretionary FUM • Employee breakdown • Industry recognition 22
Slide 23: Analysis of the balance sheet
Analysis of the balance sheet £m H117 H116 Assets Cash & liquid assets 21.65 15.43 Accrued income and other assets 24.41 24.15 Property plant and equipment 3.23 3.56 Intangible assets 64.92 65.5 Total assets 114.21 108.64 Liabilities Trade payables and accruals (16.94) (15.02) Current tax liabilitie
Slide 24: Revenue and profits growth
Revenue and profits growth £m Underlying profit Revenue 85.00 81.4 80.00 77.7 75.00 69.1 70.00 65.00 62.9 60.00 55.00 52.18 53.3 50.00 45.3 45.00 40.00 35.1 35.00 30.00 25.00 20.00 15.08 15.54 13.45 13.32 15.00 7.60 9.03 8.87 10.00 5.68 5.00 0.00 FY10 FY11 FY12 FY13 FY14 FY 15 FY 16 1H17 24
Slide 25: Underlying earnings per share, dividend growth and cover
Underlying earnings per share, dividend growth and cover 100 4 Underlying earnings per share (p) 91.33 Total Dividend (p) 87.94 90 87.92 86.24 Interim Dividend (p) 3.54 3.52 80 Underlying Dividend cover (multiple) 3.2 3.28 3 70 2.99 62.84 60 2.52 55.07 51.83 50 2 41.18 40 35 30 24.76 30.5 26 1 20 22
Slide 26: Asset allocation
Asset allocation Current guidance portfolios – February 2017 The investment managers’ tolerance limits: +/- 3% +/- 5% +/- 7% Low Growth, Low Income Income & Low to Med Medium Med to High High Growth UK FI 25 23 16 11 3 0 INT FI 18 15 9 3 2 0 UK Eq 9 9 16 24 31 34 North American Eq 2 2 8 12 16 19 Eur
Slide 27: Analysis of discretionary funds under management H117
Analysis of discretionary funds under management H117 Funds under management Revenue 10% 5%3% 5% AM 16% AM BMI 15% BMI FC Funds Funds 72% Estates 74% Service* Clients (BMAM)* 6% 12% 13% BPS 39% SIPPs MPS Private Funds Trusts/Charities 55% 75% *by value Half year results for the six months ended 31 D
Slide 28: Employee Breakdown
Employee Breakdown Investment Management Group Investment Managers 61 Non-Executive Chairman 1 Trainee Investment Managers 10 Chief Executive Officer 1 Executive Support 58 Deputy Chief Executive Officer 1 Operations 47 Non-Executive Directors 3 New business development (NBD) 19 ICT 40 NBD Administr
Slide 29: Recent awards
Recent awards • 2017 - 5 star rating for MPS, BPS and MPS platform (Defaqto). • 2016 – Citywire Wealth Manager Regional Stars – Scotland and Northern Ireland, North, Midlands, London and South East. • 2016 – 5 star rating for MPS, BPS and MPS platform (Defaqto). • 2016 – International Fund and Produ
Slide 30: Contacts
Contacts Chris Macdonald Simon Jackson Andrew Shepherd Group Chief Executive Group Finance Director Group Deputy Chief Executive 72 Welbeck Street 72 Welbeck Street 72 Welbeck Street London London London W1G 0AY W1G 0AY W1G 0AY T 020 7499 6424 T 020 7499 6424 T 020 7499 6424 D 020 7408 5577 D 020 74
Slide 31: 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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